Norwest Corp. has turned up the pressure in its longtime quest to raise Iowa's 10% deposit cap.

In addition to backing a bill before the state Senate to increase the concentration limit to 15%, the bank is also pushing a separate amendment that will be tacked onto an otherwise noncontroversial banking bill that already has passed the state House.

For several years, Norwest - the only regional banking company hitting the 10% ceiling on the share of deposits one company can hold - has unsuccessfully pushed legislation to increase the cap.

Iowa's two main bank trade groups oppose the change, saying the existing percentage preserves competition.

"Rather than to proceed in the correct and orderly manner with their bill, the advocates of increasing deposit concentration limits have decided they would try to get an amendment hooked on the Division of Banking bill," said Richard Berglund, executive vice president of the Iowa Independent Bankers.

But an executive of Norwest Bank Iowa said the company is trying to take every opportunity to move the legislation forward. "We just see it as a competitive issue," said Tom Pohlman, president, statewide banking for Norwest in Des Moines. "We believe in free enterprise, the deposit cap in my mind is an artificial barrier to growth."

Bankers and trade group executives said most other Iowa bankers have agreed to block any increase of the deposit cap.

"I'm opposed to it," said Michael A. Bauer, president and chief executive of $100 million-asset Quad City Bank and Trust, Bettendorf, a January 1994 start-up he helped organize after Norwest bought his previous employer in 1992.

"I just think in a rural state like Iowa, it's a mistake to have the deposits of the state concentrated in the hands of out-of-state banks."

Although Norwest is the only company hitting the limit right now, other large banks could face the concentration issue as interstate branching takes hold, Mr. Bauer said.

The new amendment would allow a multibank holding company to acquire as much as 13% of the state's total deposits.

However, acquisitions that lead to deposit increases over 10% would ultimately be restricted to the state's most-populous areas.

Iowa Independent Bankers said that under federal interstate branching, that restriction could actually authorize branch-only acquisitions by out- of-state banks. It could also allow Norwest to acquire its largest competitors in bigger towns.

The amendment also could hamper an otherwise noncontroversial banking bill intended to put state laws in line with nationwide interstate branching and modify last year's state banking law recodification, observers said.

Before it can pass, the amendment must face a series of legislative machinations.

It was originally attached to the Senate's version of the noncontroversial branching bill, but the House version has since replaced that. As a result, the amendment must be tacked onto the House version, passed by the Senate, then reconsidered by the House, according to Sharon Presnall, lobbyist for the Iowa Bankers Association.

And if neither the amendment nor the separate Senate bill succeed in increasing the deposit cap, bankers should be ready for another round next year, observers said.

"I think the people who want to increase the deposit cap will continue to try to get it in front of the legislature," Mr. Bauer said. "It's a hot issue."

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.