WASHINGTON - In a potential challenge to states that are considering "opting out" of interstate branching, federal regulators said Wednesday they will approve the creation of a multistate bank in a state which bars the practice.

Overriding the strenuous objections of Kansas bank regulators, the Comptroller's office allowed Lenexa-based Bank Midwest of Kansas to move its main office across state lines in a merger with Bank Midwest, its sister institution in Kansas City, Mo.

As part of its approval, the Comptroller's office for the first time asserted that a state's restrictions on out-of-state banks owning branches violates the Constitution's commerce clause.

"By hook or by crook, Comptroller (Eugene A.) Ludwig is aggressively pushing interstate banking and branching," said Kenneth Guenther, executive vice president of the Independent Bankers Association of America.

The Conference of State Bank Supervisors also protested the decision, which would allow the formation of a $991 million-asset institution called Bank Midwest. The banks are subsidiaries of Dickinson Financial Corp.

"It does seriously undercut some of the state jurisdiction and also jumps the gun" on the interstate branching law passed last year, said Robert A. Richard, vice president for regulatory services at the state regulators group.

Mr. Guenther said that because that law gives states until June, 1997 to opt out of interstate branching, the Comptroller's office "is doing by regulatory fiat what the Congress clearly left for the states."

The Comptroller's office has previously cited an 1886 statute that allows national banks to move their headquarters up to 30 miles - even across state lines - and retain branches in both states. Lenexa is 16 miles from Kansas City, Mo.

But until Feb. 16 when it approved the Bank Midwest application, it had not invoked the statute in a state that bars out-of-state banks from owning branches.

The Comptroller's office asserted that Kansas' restrictions not only are preempted by federal law, but also violate the Constitution, which bars states from restricting interstate commerce.

Despite the views of Kansas' bank commissioner and its governor at the time, the state's attorney general agreed with the Comptroller's office in a Sept. 21 opinion.

Legislation is already pending in the statehouse to have Kansas opt out of the interstate branching law. In a Nov. 30 letter to Mr. Ludwig, then- Gov. Joan Finney suggested the Comptroller's office could make it difficult for Kansas to take that step.

"If national banks are allowed to begin developing interstate branching networks in Kansas, the discussion of opting in or opting out becomes irreconcilably skewed, because any party arguing for Kansas to opt out, would be arguing to heap a tremendous competitive disadvantage upon Kansas state banks."

"By ignoring our state prohibition, and allowing the suggested transaction, the OCC will end the debate in Kansas before it begins," she added.

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