Interstate bank mergers get go-ahead from court
An court ruling this week appears to open the way for more of the cross-border banking that is catching on in New England and the Southeast. On Wednesday, the Second Circuit Court of Appeals in New York upheld two interstate bank mergers and an interstate acquisition made possible by state laws allowing such deals across state lines in New England. The acquisitions are two Massachusetts takeovers of Connecticut institutions: CBT Corporation, by the Bank of New England Corporation; and Colonial Bancorp Inc., by the Bank of Boston Corporation. The merger is between Hartford National Corporation of Connecticut and Arltru Bancorporation of Lawrence, Mass. Citicorp of New York and Northeast Bancorp Inc. of Hartford, Conn., had opposed these moves, arguing that the state laws permitting them were an unconstitutional restraint of interstate commerce. Citicorp and Northeast have an agreement to merge but cannot implement it because New England states exclude New York from their banking region.
Regional interstate banking is seen as a way for major regional banks to prepare for competition from money-center banks when nationwide interstate banking becomes a reality.