Fed Approves NationsBank-Barnett Merger

The Federal Reserve Board approved NationsBank Corp.’s $16-billion acquisition of Barnett Banks Inc., a day after the Justice Department gave its blessing to the creation of the third-largest U.S. bank. The Fed, in a brief statement, said its approval is conditional on the divestiture by NationsBank of $3.1 billion in deposits in 67 branches covering 12 markets in Florida and Georgia. Earlier this week, the Justice Department required that the combined bank divest 124 branches, including 60 branches Barnett Banks sold to SouthTrust Corp. in October. The Fed, with input from Florida regulators, increased that number by three. Not including the 60 branches that Barnett Banks sold to SouthTrust, the Fed demanded that NationsBank sell 67 branches. After the acquisition is completed, NationsBank will control 29.6% of the deposits held by insured depository institutions in Florida and 18.4% of the deposits in Georgia, according to the central bank. Officials at NationsBank and Barnett Banks were not immediately available for comment. Some community groups had urged the Fed to reject or delay the merger on the grounds that the banks had a poor record of lending in low-income neighborhoods. In New York Stock Exchange trading, NationsBank shares fell 63 cents to close at $62.13 and Barnett Banks fell 69 cents to $73.06.