GW Says Ahmanson Bid Violates State Law

Great Western Financial Corp. said California banking laws prohibit some aspects of H.F. Ahmanson & Co.’s proposed takeover. Ahmanson plans to combine Great Western, a thrift, into a new bank it has chartered in Washington state, Great Western told federal regulators. “Great Western believes this impediment could cause delays in Ahmanson’s ability to implement and realize the cost savings on which its merger proposal hinges,” the company said. Irwindale-based Ahmanson on Feb. 17 made a $6-billion hostile takeover offer for Chatsworth-based Great Western. GW instead accepted a $5.75-billion takeover offer from Seattle-based Washington Mutual Inc. Either combination would create the largest U.S. thrift. GW told the federal Office of Thrift Supervision that California’s 1995 legislation on interstate banking bans a California-based thrift--such as Great Western--from merging with an out-of-state bank and retaining the California branches. It said that would rule out Ahmanson’s plan of using a Washington-based bank as the vehicle for its takeover. GW said the state Banking Department has confirmed that interpretation of the law. The OTS is looking at Ahmanson’s request to accumulate more than 5% of GW shares. Ahmanson executives weren’t immediately available for comment.