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Arizona, which prides itself on its Western heritage and values, crosses a new frontier this week when its interstate banking bill, as broad as any in the nation, takes effect.
Starting Wednesday, the state becomes a battleground for some of the nation's biggest banks and perhaps a window into the future of U.S. banking.
But the full effects of the change are not likely to be felt for several months, when previously announced mergers are completed and banks begin to compete in earnest for an expanded share of the rich and growing Arizona banking market.
By early next year, six of Arizona's seven largest banks will be owned by out-of-state banking companies, including such giants as Citicorp, Chase Manhattan, Security Pacific and First Interstate.
Smaller banking firms, based in cities from San Diego to Milwaukee, also have agreed to pay fat premiums to enter what analysts consider one of the nation's premier banking markets.
But if Arizona is about to become a financial colony of New York and Los Angeles, no one here is complaining. Most bankers and businessmen welcome the expected flow of fresh capital and competition as the new institutions vie for market share and customer loyalty.
Arizona's legalization of interstate banking merely ratifies the longstanding presence of "foreign" financial institutions in the prosperous Sun Belt state.
Out-of-state banks have been active for years in Arizona in business lending, consumer finance, mortgages and credit cards. Nearly 40% of the bank credit cards carried by Arizonans are issued by New York and California banks.
The new law allows out-of-state banks to gather deposits and offer a full range of banking services by buying existing Arizona banks.
The immediate beneficiaries will be shareholders of acquired banks, who will be reaping rich rewards.
Newspapers, radio and television stations will also profit, carrying thousands of dollars worth of bank advertising trumpeting new ownership ties and offering special deals to lure customers away from their current banks.
Global Services
In their promotional campaigns, the New York banks, Chase and Citicorp, will stress their global services and credit cards, the California banks will push their electronic teller networks and account packages, and the Arizona banks will emphasize local ownership and personal service.
"It's going to be a lot...