To let it buy Barnett Banks Inc., NationsBank Corp. expects the government to require between $2.9 billion and $3.6 billion of deposits to be divested.
The merger would be the first to trigger a provision in the 1994 federal interstate banking law barring any bank from controlling more than 30% of the deposits in a single state.
Florida has its own deposit cap law, also set at 30%, but calculated slightly differently. However, sources said the divestitures would be driven less by deposit caps than antitrust concerns. In Florida, four banks control roughly 65% of the market.
Barnett, based in Jacksonville, is the state's largest bank, with 629 branches and a 20% market share. First Union Corp., Charlotte, N.C., ranks second, with 525 branches. NationsBank, also headquartered in Charlotte, has 475 branches in Florida, and SunTrust Banks Inc., Atlanta, rounds out the top four, with 375 branches.
The Federal Reserve Board and the Justice Department assess a merger's impact on a market-by-market basis. The markets with the greatest overlap would be Tampa, Sarasota, Orlando, and Bradenton.
NationsBank executives told analysts Friday that they expect to earn a 15% premium on the deposit sales-revenue the bank plans to use to offset a $600 million pretax restructuring charge.
Industry analysts and lawyers said NationsBank may be underestimating by as much as $2 billion the amount of deposit sales the government may require.
Even using NationsBank's lower figures, the deal would still rank second in divestitures ordered. BankAmerica Corp. holds the record, $8.5 billion, related to its acquisition of Security Pacific Corp. in 1992. Fleet Financial Group. had to sell $3 billion of deposits when it bought Shawmut National Corp. in 1995.
But satisfying the Fed and the Justice Department would be only half the battle. Florida's attorney general challenged Barnett's purchase of First Florida Banks Inc. in 1992-after federal officials approved it. Barnett eventually reached an agreement with state officials that limited layoffs.
On Friday, NationsBank and Barnett announced a hiring freeze effective immediately to limit firings. "NationsBank is pretty sophisticated," said Neal Petersen, a former Fed general counsel who is now a consultant with KPMG Peat Marwick. "They've had discussions with the Fed and the Justice Department, and they've got a game plan pretty well mapped out."
