2 groups sue to halt Boatmen's purchase

DENVER -- Two community groups have asked a federal court to delay regulators' approval of NationsBank Corp.'s $9.8 billion takeover of Boatmen's Bancshares Inc., a move the bank warned would cost $36 million a month.

The groups accused the Federal Reserve of ignoring several major issues when it approved the purchase by Charlotte, N.C.-based NationsBank on Dec. 16. That includes the impact of the takeover on credit and retail services for poor communities in New Mexico, one of nine states served by St. Louis-based Boatmen's.

"They just rubber stamped it," said Matthew Lee, director of one of the groups, Inner City Press/Community on the Move in Bronx, N.Y. In their suit, filed Christmas Eve in the 10th U.S. Circuit Court of Appeals in Denver, Inner City Press and the New Mexico Alliance asked that the acquisition, now scheduled for Jan. 7, be delayed until the Fed's approval can be reviewed. The suit is the latest attack on NationsBank's plans to buy Boatmen's, following a month after an embarrassing protest by dozens of chanting demonstrators from St. Louis who marched in front of the New York Stock Exchange. Community groups also have formally opposed the merger, claiming NationsBank is not fulfilling its obligation under the 1977 Community Reinvestment Act to serve equally the rich and poor in the communities where it does business. NationsBank took the suit seriously. Chief Financial Officer James Hance Jr., in an affidavit in response to the suit, said delays would disrupt complex plans tied to completing the takeover Jan. 7, including firing 14 top Boatmen's executives. It would also be costly, generating $36 million a month in added expenses, Hance said. A bank spokesman Thursday said the Fed had thoroughly reviewed the bank's application, and "we will vigorously oppose" the suit. The groups want the court to throw out the Fed's approval of the purchase and force regulators to take another look, Lee said. Lee said the Fed didn't adequately look at how the purchase would impact consumers' ability to get credit in New Mexico, where Boatmen's is the largest bank. The Fed glossed over problems at NationsCredit, the bank's consumer finance unit, which allegedly targets the poor with high interest loans, Lee said. The Fed also didn't do a good job of determining whether NationsBank's plans to close some branches would reduce service to low and moderate income communities, Lee said. The Fed didn't for example, force NationsBank to submit a list of branches it expects to close, as other big banks have done during major acquisitions, he claimed. NationsBank doesn't expect to close many branches since its operations overlap with Boatmen's only in Texas and Tennessee, a bank spokesman said. NationsBank and Boatmen's shareholders have approved the merger. With approval by the Fed, the bank's main national regulator, there were no other roadblocks to closing the purchase, aside from the suit. NationsBank is the nation's fifth-largest bank, with $188 billion and some 1,900 branches in nine Southeast states from Maryland to Texas. St. Louis-based Boatmen's is one of the one the largest banks in Missouri, Kansas, Arkansas, Oklahoma and New Mexico. It has 650 branches and about $40.7 billion in assets.

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