Bank of America wins Fed OK of LaSalle purchase

NEW YORK (Reuters) - Bank of America Corp (BAC.N) on Friday won approval from the U.S. Federal Reserve for its $21 billion acquisition of LaSalle Bank Corp from Dutch bank ABN AMRO Holding NV AAH.AS.

The decision is the final regulatory approval needed for the transaction, which is expected to close in early October, Bank of America said.

LaSalle has about $160 billion of assets, 411 branches, 1,500 automated teller machines and 1.4 million customers. It operates mainly in the affluent Chicago area, and in Michigan, where high unemployment and an ailing auto industry have dragged on the economy. LaSalle also operates in Indiana.

Adding LaSalle would fill gaps in Bank of America's branch network, and give it its first 264 Michigan branches. It would give Bank of America about $1.7 trillion of assets, second nationally to Citigroup Inc (C.N), and more than 6,100 U.S. branches, nearly twice as many as any other bank.

The purchase would also add $59.1 billion of deposits, giving Charlotte, North Carolina-based Bank of America $674.5 billion. That equals 9.88 percent of the $6.83 trillion of deposits nationwide, according to the Fed order, just under the 10 percent federal cap.

Bank of America would become the largest bank in Illinois, with a 12.9 percent deposit share, and would have an 18.6 percent deposit share in Chicago, according to the Fed.

While some critics raised competitive concerns, the Fed said the LaSalle transaction "would not have a significantly adverse effect on competition" in any relevant banking market.

The Fed did not include deposits at Countrywide Financial Corp CFC.N in its calculations. Bank of America on August 22 bought $2 billion of nonvoting convertible shares of the largest U.S. mortgage lender, but the central bank said this investment did not make Countrywide an affiliate.

LaSalle would be Bank of America Chief Executive Kenneth Lewis' third major acquisition. He paid $48 billion for FleetBoston Financial Corp in 2004, and $34.2 billion for credit card issuer MBNA Corp in 2006.

ABN AMRO agreed to sell LaSalle in April when it accepted a takeover offer from British bank Barclays Plc (BARC.L).

The sale was thrown into doubt after a group led by Royal Bank of Scotland Plc (RBS.L) later bid for all of ABN AMRO. But the Dutch Supreme Court in July said ABN AMRO did not need shareholder approval for the sale, removing a major hurdle.

Bank of America spokesman Scott Silvestri said some jobs would be lost as part of cuts related to the LaSalle purchase. "Further specifics on job consolidations at this time would be premature because our own analysis is ongoing," he said.

In its order, the Fed also rejected concerns by some commentators about Bank of America's relations with third parties engaged in subprime mortgage lending. It said these commentators did not show the bank made, bought or securitized "predatory" home loans or otherwise conducted abusive lending.

Bank of America quit subprime lending in 2001.

(Additional reporting by John Poirier in Washington, D.C.)