First Security-Zions merger gets Justice OK
Deseret News 9Dec99 B4
By Max Knudson: Deseret News business editor

SALT LAKE CITY, UTAH -- The merger of the two major Utah banks, both of whom have strong Mormon heritage, is a step closer to reality. The U.S. Department of Justice approved the merger of First Security Corp. with Zions Bancorp., requiring that the banks divest themselves of 68 branches in Utah and Idaho. The merger now only needs approval from the Federal Reserve Board of Governors and a vote by shareholders to be official.

The divestiture of branches is meant to ensure that the combined bank doesn't hold a banking monopoly in any market. "These divestitures will preserve competition throughout the banking markets served by these parties, whether urban, suburban or rural," said the Justice Department's Joel I. Klein, who heads the Department's Antitrust Division. "The divestitures will ensure that customers will continue to have choices for banking services." The number and size of the branches being divested is large enough to make the second largest bank in Utah.

The combined bank will be the 20th largest in the U.S. and have about $40 billion in assets. And officials at the banks are convinced that the merger will now be approved. "They (the Fed) are an independent body, not a rubber stamp, but we hope they will expedite (the application) now and move forward." said Zions Bank President Scott Anderson. Anderson says he can think of no reason why the Fed would not approve the deal before year end. "We think it's now possible to close this month - that's our goal - but if it were to fall into next year, it wouldn't impact the viability of the merger at all," he said.

As expected, the merger will result in some consolidation of staff. Both banks have put in place a hiring freeze since the merger proposal was announced, and the companies estimate that 1,500 to 2,000 "overlapping jobs" will be eliminated from the combined staff of 17,000.

Two attempts have been made to derail the agreement. Provo attorney George M. Allen filed a lawsuit in October challenging the merger because he claims it will hurt small businesses in Utah county and southern Utah. He says the Justice department ruling "now gives us a defined target at which to shoot. We now know exactly what we must ask Judge Benson to stop and we are now preparing to do just that." Allen expects to file a brief with the court by Monday.

Another effort by a coalition that calls itself the "Western Citizens for Access to Credit" has asked the Fed to hold public hearings on the merger. But while the Fed says it will consider hearings, none have been announced yet.

Both Zions Bancorp and First Security were founded by Mormon pioneers. Zions was formed by the LDS Church in the late 1800s to provide credit and cash for the emerging Utah economy. First Security was founded by Mormon David Eccles, also in the late 1800s.