U.S. approves one NationsBank for Md., Va., D.C.

March 14, 1995|By David Conn | David Conn,Sun Staff Writer

NationsBank Corp. has received the go-ahead to move its local bank headquarters from Maryland to Virginia, and merge its operations in those two states and Washington, D.C., into one seamless bank, with branches in each jurisdiction.

The federal Office of the Comptroller of the Currency (OCC) approved NationsBank's two-stage application. The Charlotte, N.C.-based company first wants to move the main office of its subsidiary NationsBank of Maryland from Bethesda to McLean, Va. The second step calls for the merger of that subsidiary with Richmond-based NationsBank of Virginia.

"As a result of the proposed merger, two of the holding company's existing bank subsidiaries [in Maryland and Virginia] simply will be combined into one bank with branches," wrote Senior Deputy Comptroller Frank Maguire in a seven-page ruling by the OCC on Friday.

NationsBank said yesterday that the move will save it $1 million a year in administrative costs.

NationsBank last year moved the main office of its Washington bank to Maryland and merged the two. Every bank must have one "main office," but the term is just an arbitrary legal designation; it doesn't have to be a bank's headquarters. Federal law allows banks to move their main branches up to 30 miles, even across state lines. Once a bank's main branch is in another state, it can be merged with a bank already in that state.

NationsBank of Maryland with drew its application to take a 30-mile leap from Bethesda into Virginia after Maryland Bank Commissioner Margie Muller opposed the move. She argued that state law prohibits out-of-state banks from operating branches in Maryland without a legal bank headquarters here.

Ms. Muller acquiesced after NationsBank invoked a "grandfathering" rule that exempted it from the state law.

"I think they and a few other very large institutions are ahead of the game, and that's the way it's played," Ms. Muller said. She was referring to NationsBank and to First Fidelity Bancorp. of New Jersey, which has exploited legal loopholes to create a single bank with branches in four East Coast states, including Maryland.

All of these machinations would become obsolete if banks were given permission to ignore state boundaries in choosing where and how to run their branches. Under a federal law passed in September, that day would arrive in September 1997, unless individual states vote to "opt in" to interstate branching earlier, or "opt out" entirely.

Bankers argue that the ability to operate one bank across state lines will save money -- now spent on separate boards of directors and financial reports -- and make life easier on customers who live and work in different states. Some activists are worried such a system would lessen any leverage they have over banks regarding community lending issues, except in the one remaining headquarters state.

The General Assembly is considering a bill to enact full interstate branching. "It's happening all around us," Ms. Muller said. "Let's make it legitimate and let's make it orderly. I think that's what the legislation will do."

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