Monday, April 13, 1998 | 10 a.m.
NationsBank Corp. and BankAmerica Corp. said today they are merging in a $64.8 billion deal to create a coast-to-coast banking giant, and Banc One Corp. is combining with First Chicago NBD Corp. in a $29.8 billion union to create the dominant bank in the Midwest.
The two mega-mergers come after last week's planned union of banking giant Citicorp and brokerage and insurer Travelers Group pressured other financial companies to accelerate their already furious consolidation.
The NationsBank BankAmerica merger would be the second-largest corporate marriage ever behind the planned $75.7 billion Citicorp-Travelers union, which would form the nation's largest financial services company.
NationsBank, based in Charlotte, N.C., has its strength across the nation's south and midsection. BankAmerica spreads east from its San Francisco base. Together they would have $570 billion in assets, making it the nation's biggest bank ahead of Chase Manhattan Corp.
The combined bank, which will take the BankAmerica name, will operate in 22 states. It will have 4,800 branches and 15,000 automated teller machines.
The Las Vegas-based head of Bank of America said because the new holding company will bear the locally recognized name, he does not expect customers to be affected much, particularly in the months leading up to the finalization of the merger.
"There won't be many changes for us," said George Smith, president of Bank America-Nevada. "We'll become a true nationwide bank and our customers will be able to enjoy the greater resources of the merged company. We already operate as a statewide bank and there will be no big functions that will go away as a result of this."
Smith also said NationsBank doesn't have a presence in the gaming industry, so local bank officials will take a leadership role in that sector. The combined resources of the banks, however, should increase the availability of capital.
"It's a merger of equals," said Smith. "Dave Coulter, our CEO, has always been a huge supporter of gaming. Once the merger takes effect, we'll be that much bigger with that much more clout and more investment bank power. You know we won't leave our interest in gaming behind."
Bank of America is the biggest bank in Nevada with 87 branches and 2,500 employees.
The merger is expected to be finalized in the fourth quarter of this year, pending shareholder and regulatory approval.
Once that happens, local customers would be able to access ATMs and use branches at NationsBank operations in the East and their customers will be able to do the same here.
But next year is when the impact of the merger could affect customers. Smith said a long-range goal of the merged bank would be to put the operation under one computer system. Las Vegas bank spokesman Paul Stowell said next year also will be the time when Bank of America is planning to determine how much of an impact the year 2000 will have on its systems. It's possible the merging of computer systems at the 2000 evaluation will occur at around the same time.
"We've built a truly national franchise with this ideal partnership," said BankAmerica chairman and chief executive David Coulter, who will become president of the combined bank.
The banks have 180,000 employees and the merger will eliminate 5,000 to 8,000 positions according to early estimates, said BankAmerica spokesman Mike Zampa.
However, Smith said he doesn't expect eliminations will be a factor here since there is no crossover of companies. The two states where both companies operate are Texas and New Mexico. In Texas, NationsBank is the No. 1 operator, while it is one of the top competitors in New Mexico.
The Banc One-First Chicago combination will create the fifth-largest banking company in terms of assets, at $230 billion. The company will retain the name of Columbus, Ohio-based Banc One but will be headquartered in Chicago.
The new Banc One will have more than 2,000 branches and 9,150 ATMs. The companies said the expense of job cuts and other merger-related costs will reduce its earnings by $1.25 billion. They did not provide specific numbers for jobs to be eliminated.
All four companies' stock prices jumped in morning trading on the New York Stock Exchange. NationsBank was up $7.06 1/4 at $83.50 per share; BankAmerica rose $4.81 1/2 to $91.31 1/4 ; Banc One was up $1.87 1/2 at $63.62 1/2 ; and First Chicago climbed $6.25 to $100.25.
The sudden wave of massive mergers are the three largest deals ever in the financial services business. They speed up the already rapid makeover of the nation's banking industry as Congress is still trying to remove Depression-era barriers block banks from getting fully into the insurance and brokerage businesses.
Like the Citicorp-Travelers deal, the mergers announced today will combine banking and investment services such as mutual funds.
BankAmerica and NationsBank both purchased investment firms last year to broaden their options. BankAmerica acquired Robertson Stephens & Co., while NationsBank took over Montgomery Securities. Banc One and First Chicago also have money-management businesses.
NationsBank chairman and CEO Hugh McColl, 62, will lead the merged bank and retain his principal offices in Charlotte, N.C. Coulter, 50, will remain in San Francisco and is eventually expected to succeed McColl, the companies said.
Under McColl's leadership, NationsBank has become the third-biggest banking company through aggressive acquisitions, such as the takeovers of Barnett Banks Inc. and Boatmen's Bancshares since January 1997. It has $310 billion in assets.
John McCoy, chairman and CEO of Banc One, will become president and CEO of the merged company. Officials from both companies were unavailable for comment this morning pending an afternoon news conference.
THE SUN'S Richard N. Velotta contributed to this report.
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