Arizona Bill Could Impede B of A Merger : Banking: Another state Legislature discusses imposing limits on one bank’s share of deposits.

Legislators in Arizona on Wednesday joined the effort to impede BankAmerica Corp.’s union with Security Pacific when a measure was introduced into the state’s Senate that would restrict the percentage of deposits a newly merged bank can hold in the state.

The bill, moved along by one legislative committee on a 5-4 vote, closely resembles a measure making its way through the Legislature in the state of Washington, where B of A’s potential antitrust problems are much more severe.

The Arizona bill would limit to 30% the commercial bank deposits a newly merged bank could hold. But Arizona bankers questioned whether the bill is needed because after the merger B of A will hold less than the threshold level.

In addition, B of A could challenge the law as unfair. Since the bill only covers newly merged banks, Arizona’s largest financial institution, Valley National Bank, would not be affected. Valley National controls about 32% of the state’s $30 billion in deposits.

Officials in the Arizona attorney general’s office have not taken a position on the merger, but they have expressed concern that the $4-billion combination between B of A and its Los Angeles rival will reduce competition in the state.

B of A, which argues that banking in the state will still be highly competitive, has proposed divesting about $2.2 billion in customer deposits when it combines with Security Pacific.

States lack authority to approve or deny the overall bank merger. The acquisition needs approval from the Federal Reserve Board and antitrust officials at the U.S. Justice Department.

The Arizona and Washington actions could interfere with plans to merge the two banks’ operations in those states and could possibly delay the overall combination, the biggest in banking history.