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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 Boatmens Bancorp of St Louis Don Powell was confronted with a challenging decision as he served as First Nationals 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 Powells 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 banks 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 Boatmens The number of banks in the United States has increased greatly since the 1930s 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 permissible activities of commercial banking and investment banking Gradually over time commercial banks and investment banks introduced innovations that allowed them to offer competing services
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