Shareholders OK $21B Bank Merger

Shareholders of Banc One and First Chicago NBD Corp. approved a $20.6 billion merger Tuesday, clearing the final hurdle in creating the nation's fifth-largest bank and the dominant one in the Midwest.

Banc One's headquarters will be moving from Columbus, Ohio, to Chicago, the companies have said, but no date has been announced.

The overwhelming shareholder approval came less than a day after the Federal Reserve approved the deal on the condition the combined Banc One, with $230 billion in assets, divest 39 branches in Indiana.

A First Chicago spokesman said the merger now should be completed by late October. Bank executives have rushed to complete the deal to cut costs and have said other buyouts could come quickly if a trend toward big financial consolidations continues.

The merger plan was announced in April during the crest of Wall Street's bull market. At the time, the stock deal was worth $28.9 billion, but market losses in recent months have sliced it to about $20.6 billion.

On the same day the merger was made public, NationsBank Corp. and BankAmerica Corp. announced a $62.5 billion marriage that would create the country's first coast-to-coast bank.

The two deals came just a week after banking giant Citicorp and broker-insurer Travelers Group said they would combine their businesses into the nation's biggest financial company.

Some banks have criticized the Banc One-First Chicago NBD merger, saying it would threaten competition. In addition, several community groups had accused Banc One of abandoning minority communities and disproportionately excluding and denying loan applications of blacks and Hispanics.

In its order, the Federal Reserve noted critics' concern about possible branch closings, reduced lending to small businesses and first-time homebuyers, bank employee layoffs and higher fees for bank services.

The Fed said it carefully reviewed the facts and concluded that approval of the merger, with the required divestitures, would not create a risk of such problems.

Last Tuesday, the Justice Department and the Indiana attorney general's office gave their approval to the merger, pending the sale of the $1.47 billion in Indiana deposits to Union Planters Corp. of Memphis, Tenn.

The two banks were ordered to sell $900 million in deposits in Indianapolis, where together they control one-third of the banking market.

They also must divest other deposits in the Indiana communities of Bedford, Bloomington, Carmel, Corydon, Delphi, Fishers, Greenwood, Lafayette, Mooresville, Remington and West Lafayette.

Indiana is the only state where Banc One and First Chicago have a significant overlap in operations.

Under the merger deal, First Chicago shareholders are to receive 1.62 shares of Banc One stock for every share they own.

The new bank will have more than 2,000 branches and 9,150 automated teller machines in the Midwest, South and SouthwestBoth companies also have money-management businesses.

Banc One chairman and chief executive officer John B. McCoy will become president and CEO of the merged company. First Chicago's chairman and CEO, Verne Istock, will become Banc One's chairman.

Banc One, with assets of around $116 billion, has branches in Ohio, Indiana, Illinois, Wisconsin, Kentucky, West Virginia, Louisiana, Oklahoma, Texas, Arizona, Utah and Colorado.

It has no presence in Michigan and 3 percent of the Illinois market, places where First Chicago is a market leader.

First Chicago has assets of $114 billion and operates more than 650 branches and 1,400 ATMs in Illinois, Indiana and Michigan.

Written By Cliff Edwards