BankAmerica and NationsBank Merger Clears Regulatory Hurdle

Strategic Insights -

The proposed merger between BankAmerica Corp. and NationsBank Corp. has cleared the final regulatory hurdle, allowing the two banks to join forces and become the largest U.S. banking operation. The deal, which was announced on April 13, involves the sale of 17 branches in New Mexico with $492 million in deposits. The boards of both banks are set to approve the merger on September 23, paving the way for the creation of a new bank with total assets of nearly $580 billion and a presence in 27 states.

Key Takeaways:

  • The BankAmerica and NationsBank merger has received approval from the U.S. Federal Reserve, marking a significant milestone in the deal.
  • The banks have agreed to sell 17 branches in New Mexico with $492 million in deposits, the only region where the two companies overlapped enough to concern regulators.
  • The new bank, which will keep the BankAmerica name and be based in Charlotte, will have branches in 27 states and control almost 8.5 percent of the nation's bank deposits.
  • The combined company will have roughly $580 billion in total assets, making it the largest U.S. banking operation.
  • NationsBank shares rose $3.12 to $73.18 in trading Monday, while BankAmerica shares rose $2.75 to $82.1.
  • The sale of the 17 branches in New Mexico is worth $492 million, which is roughly a third more than the two banks had initially told regulators they expected to sell.
  • Analysts believe that the sale of the branches will have little impact on the new bank, given its vast size and scale.

Statistics:

  • Total assets of the new bank: nearly $580 billion
  • Number of states where the new bank will have branches: 27
  • Percentage of nation's bank deposits controlled by the new company: almost 8.5%
  • Value of the proposed sale: $492 million
  • Percentage increase in sale value compared to initial expectations: 33%
  • Value of NationsBank shares on Monday: $73.18
  • Value of BankAmerica shares on Monday: $82.1
  • Number of BankAmerica and NationsBank branches to be sold in New Mexico: 17

Sources:

  • "BankAmerica and NationsBank win Fed approval; deal set for final OK," Bloomberg, Friday [no date provided]
  • "Two Sides of the Same Coin," Accounting Today, [no date provided]
  • "Bank America, NationsBank Agree to Buy Each Other," The New York Times, April 14, [no date provided]
  • "BankAmerica, NationsBank shares soar on merger news," USA Today, April 14, [no date provided]