Non-Bank Expansion Denied BankAmerica

BankAmerica Corp. has been denied permission to open 13 so-called non-bank banks in 11 states, slowing the giant bank holding company’s efforts to expand nationwide.

The Comptroller of the Currency, which regulates national banks, last week turned down non-bank banking applications from BankAmerica and Washington-based American Security Corp., the first time such filings had been rejected. The regulatory agency has granted preliminary approvals for 276 non-bank banks in 38 states.

Meanwhile, the comptroller Monday gave First Interstate Bancorp, one of BankAmerica’s chief West Coast rivals, preliminary permission to charter a non-bank office in Boston. First Interstate now has approvals for 12 such facilities across the country.

Confidential Bank Exams

A spokeswoman for the comptroller’s office would not divulge the reason for the BankAmerica rejection, saying it was based on confidential bank examinations.

A non-bank, or limited-service, bank is permitted to accept either demand deposits, such as checking accounts, or write commercial loans--but may not do both--thus circumventing legal prohibitions against interstate banking.

Although 14 such institutions currently are in operation, a federal court in Florida has put final approvals for additional offices on hold while regulatory, legal and legislative issues are resolved.

BankAmerica sought approval to open offices aimed at the consumer market in major Western cities plus Atlanta, Boston, Chicago, Miami, New York and Washington.

The rejection apparently is related to Comptroller C. Todd Conover’s concerns about the bank’s capital position. Bank of America, the holding company’s chief subsidiary, signed an agreement with regulators last November to increase its capital-to-asset ratio to 6% from less than 5% over the next two years as a cushion against anticipated loan losses.

The San Francisco-based bank holding company, the nation’s second largest, accepted the decision philosophically.

“It’s probably a moot point given that the comptroller’s ability to finally charter so-called non-bank banks has been clouded by recent regulatory and legal decisions and is not likely to be resolved soon,” the bank said in a statement. “The comptroller’s decision will not deter us from using all appropriate vehicles to better our competitive posture under new market conditions.” The bank said it already had surpassed capital-ratio goals agreed on with the comptroller. At the end of 1984, the ratio stood at 5.9%.