Summarized by Kent Larsen
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
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.