The U.S. Federal Reserve Board has approved TD Bank’s acquisition of 51% of Maine-based Banknorth Group Inc.

It notes that TD and Banknorth currently compete directly in the Metro New York banking market. But that, after the deal, the increase in concentration would be small and numerous competitors would remain. It also notes that the Department of Justice also has reviewed the anticipated competitive effects of the proposal and has advised the Board that consummation of the proposal would not have a significantly adverse effect on competition.

It notes concerns expressed about the amount of consideration Banknorth shareholders might receive in the future if TD seeks to acquire the remaining Banknorth shares. There were also comments that projects financed by TD in North and South America that are said to have negative environmental consequences and about press reports about a dispute in Canada between TD and one of its retail customers. “These matters are not within the Board’s jurisdiction to adjudicate or within the limited statutory factors that the Board is authorized to consider when reviewing an application,” it says.

It does consider issues such as capital adequacy, asset quality, and earnings performance. Based on its review of these factors, the board found that TD has sufficient financial resources to effect the proposal. “The capital levels of TD would continue to exceed the minimum levels that would be required under the Basel Capital Accord and its capital levels are considered equivalent to the capital levels that would be required of a U.S. banking organization,” it says.

The order also notes that another commenter expressed concern about a press report of anomalies in the trading of Banknorth shares before the proposal was publicly announced. The board says that the Securities and Exchange Commission, and self-regulatory organizations have the authority to investigate trading activity and to take action if there are violations of the federal securities laws or SRO rules.