WASHINGTON - Another national bank has won permission to use a loophole in the banking laws to do business across state lines.

Last week, the Office of the Comptroller of the Currency allowed PNC Bank Corp. to merge its Kentucky and Ohio banks using the so-called 30-mile rule.

As a result, the two PNC subsidiaries now serving the Cincinnati market will be combined into a single bank with branches in both states.

That 1866 statute allows a national bank to move its main office 30 miles or less, even across state lines. The OCC also allows the bank to operate the original location as a branch.

PNC will move PNC Bank, Northern Kentucky's headquarters from Fort Mitchell, Ky., to Cincinnati - six miles away. The move will produce a $4.65 billion-asset Ohio bank with 10 Kentucky branches and 60 Ohio branches.

More than a dozen banks - led by $170 billion-asset NationsBank Corp. and $33.4 billion-asset First Fidelity Bancorp. - have aggressively used the 30-mile statute in the past year to get a jump on interstate branching restrictions that will be lifted for most banks in 1997.

In approving the PNC deal, the OCC argued that a Kentucky statute that prohibits out-of-state banks from having branches in Kentucky violates the Constitution's commerce clause, which limits states' abilities to erect barriers to interstate trade.

The OCC has used similar arguments in past approvals - most notably one involving Bank Midwest in Kansas City last month.

The agency also argued that the Kentucky statute is preempted by federal banking laws.

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.