NationsBank Corp. is running into criticism for steps it has taken that keep it within market-share limitations in Texas.

In April, the month it announced its merger agreement with BankAmerica Corp., NationsBank started moving almost $6 billion of wholesale deposits from Dallas to the headquarters office in Charlotte, N.C.

The shift brought the banks' combined share of deposits below Texas' 20% cap. Now NationsBank is arguing to regulators that deposit and branch divestitures, the common remedy for over-concentration in a banking market, are unnecessary.

But community reinvestment advocates don't want to let the superregional banking giant off the hook. What bankers may view as a creative legal maneuver could be contested in the court of public opinion.

Texas Banking Commissioner Catherine Ghiglieri, noting that NationsBank had previously been above 20% statewide, is raising the possibility that at least the spirit of the law has been violated.

A NationsBank spokesman declined to discuss the matter, though the facts were spelled out in a filing last month with the bank's primary regulator, the Federal Reserve Bank of Richmond.

NationsBank said it had moved two pieces of business-$4.7 billion of deposits in nationwide corporate treasury management operations and $1.1 billion tied to a real estate investment trust-from Dallas to Charlotte in April and May.

Critics were particularly concerned that NationsBank and BankAmerica together would have more than 40% of the Dallas banking market. The shift brought that down to around 25%.

NationsBank claimed in the Fed memorandum that post-merger market concentration in Dallas would be "well within the safe-harbor thresholds." It said "mitigating factors in Dallas are numerous and significant and guarantee a competitive environment after the proposed merger."

"In some respects it becomes a game," said Ms. Ghiglieri. "Do I want them gathering deposits and moving them someplace else and employing them? I don't think so."

J. Reid Moore, a bank merger consultant at Speer & Associates in Atlanta, said NationsBank has a valid argument. "A lot of those deposits probably don't really belong in Dallas," he said.

But Community Reinvestment Act expert Kenneth H. Thomas asserted that "they have almost developed two sets of books."

Mr. Thomas, a Miami consultant, estimated that NationsBank and BankAmerica should have to divest at least $600 million of Dallas deposits to quell antitrust concerns.

The deposit shift was "clearly inappropriate," he said. "If they can do it, every bank should be able to do it. I don't think they're going to get away with it."

Moving deposits from market to market in conjunction with a merger is rare, according to Linwood Gill, the Richmond Fed's assistant vice president of banking supervision.

If such actions were taken specifically to avoid divestitures, they would not be looked upon favorably by regulators, he added.

"The applicant can use any data" it wants, he said. "But just to make it so it looks good on paper for antitrust purposes-that wouldn't cut it."

Ms. Ghiglieri said she has discussed her concerns about market concentration, both in Dallas and statewide, with NationsBank executives. She said she plans to address the issue in a formal comment letter to federal regulators.

"No one institution is supposed to have more than 20% of the deposits in Texas," the state regulator said. "But no matter which way you cut it," NationsBank is "the dominant player in Texas."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.