This Mini-Case focuses on the very divisive issue of bank consolidation, its impact on a local economy, and the growing trend of bank mergers and acquisitions that the United States has faced over the past decade. In this case we examine the 1993 merger between First National Bank of Amarillo and the mega-bank known as Boatmen's Bancorp of St. Louis. Don Powell was confronted with a challenging decision as he served as First National's CEO. A number of the parties involved favored a merger while others did not. Members of both sides of the issue had valid complaints to support their positions.
Powell's options in this case were rather limited. To merge or not to merge, that was the question that he had to answer. Proceeding with the merger would result in an immediate financial benefit to the stockholders as well as a considerable increase in the assets and resources to which the bank would have access.
The argument can be made that these increased capabilities would ultimately benefit the bank's customers by offering them more options and lower interest rates.
Declining the merger would put the minds of the local investors and customers at the bank at ease knowing that the personalized business relationship that they had developed with the bank over the year would not be jeopardized. Bank employees would not be as concerned about losing their jobs due to corporate downsizing. Further apprehension would exist concerning a decline in the amount of small business loans the bank would be willing to finance should it decide to merger with Boatmen's.
The number of banks in the United States has increased greatly since the 1930's (see Appendix A). The Glass-Steagall Act of 1933 attempted to eliminate conflicts of interest in the banking industry by creating a wall separating the...