B OF A IN MERGER; NEW FIRM 1ST TO GO NATIONAL.

Byline: Laura M. Holson The New York Times

Two huge banking mergers are expected to be announced today, accelerating a wave of consolidation that is likely to leave the financial services industry with a few giant powerhouses.

In the bigger of the two deals, Nationsbank Corp. and BankAmerica Corp. will merge, people close to those negotiations said Sunday night, creating the nation's first coast-to-coast bank, the largest in terms of total branches and deposits. The combined corporation would be the nation's second-largest bank holding company in terms of total assets.

The second deal would create the fifth-largest banking company in terms of assets by combining Banc One Corp. with First Chicago NBD Corp., people close to those talks said. The resulting bank would be dominant in the Midwest.

BankAmerica is based in San Francisco. Nationsbank's headquarters are in Charlotte, N.C.

The expected deals come only a week after Citicorp and Travelers Group Inc. announced that they would merge to create the world's largest financial services company, to be named Citigroup Inc. Banking industry analysts had said the Citigroup deal would put more pressure on other companies to merge in order to compete.

Few details could be learned Sunday night about the merger between Nationsbank and BankAmerica, except that it would be a stock-for-stock transaction. The boards of both companies have already approved the merger, people close to the talks said. One person described the merger as a ``true sharing of power.''

Sources said Hugh L. McColl Jr., Nationsbank's chief executive, was expected to be named chairman of the combined company, while David A. Coulter, chairman and chief executive of BankAmerica, was expected to be named president.

The proposed merger will be a feat for the two companies, considering that three years ago the two companies broke off talks, in part because they could not decide who would run a combined company.

The deal between First Chicago and Banc One has an estimated value of $30 billion in stock, people close to those talks said.

First Chicago shareholders will receive 1.62 shares in a new company, which will keep the Banc One Corp. name and will be headquartered in Chicago, for every share they own. Banc One shareholders will get one share of the new company for every share they own.

About 60 percent of the combined company will be owned by Banc One shareholders. The balance will be owned by First Chicago shareholders.

Verne G. Istock, First Chicago's chairman and chief executive, is expected to be named chairman of the new company. John McCoy, Banc One chairman and chief executive, is expected to be named president and chief executive.

All four companies are expected to announce their deals today at the Waldorf Astoria in Manhattan.

Talks resumed

Rumors circulated late last week that talks had resumed between Nationsbank and BankAmerica, which had reportedly discussed a merger in the summer of 1995. Those previous discussions, eventually broken off, were between McColl and former BankAmerica Chairman Richard Rosenburg, who retired in early 1996 and was replaced by David Coulter.

For NationsBank, acquiring BankAmerica, a dominant institution in California, would meet McColl's long expressed need of filling the one big hole in his national franchise. Previous big regional acquisitions by Nationsbank have included last year's acquisition of Florida-based Barnett Banks for $15.5 billion and a $9.75 billion buyout of St. Louis-based Boatmen's Bancshares in 1996.

Diane Glossman, a banking analyst at Lehman Brothers, said the Nationsbank-BankAmerica merger creates a national banking franchise in one fell swoop. It has reach from the consumer up through large corporate America, complemented by its essentially national scope.

Nationsbank stock, which closed at $76.43 Thursday before the Good Friday holiday in the financial markets, has been inexpensive relative to other banks' lately, on investors' concerns that the bank might announce another high-priced purchase. Thursday's stock price was 17.86 times earnings per share. That compares to BankAmerica's Thursday closing price of $86.50, which was more than 19 times earnings.

Shares of Banc One, favored among investors for its strong retail banking business, closed Thursday at $61.75, or more than 30 times earnings.

First Chicago's stock closed at $94 a share on Thursday, nearly 19 times earnings.

Growth is goal

The two merger announcements expected today will further raise the standard for how big financial companies feel they need to be. They are in a race to assemble the broadest line of financial products, including bank accounts, loans, investments and insurance. And they also want the biggest lists of potential customers for those products.

In addition, as they expand, the banks hope that they can lower their costs through more efficient marketing and computer processing. Until these most recent combinations, for example, there were no banking companies with enough geographic scope that they could take advantage of the efficiency of network television advertising, rather than buying ads only in the local regions in which they operated.

These deals represent the inevitable result of the elimination over the last decade of the laws that restricted banks to a single state. Like the transcontinental railroad, banks on the East Coast have been marching westward while banks in the West have moved to the East.

Coast to coast

The meeting, as exemplified by the Nationsbank-BankAmerica combination in particular, offers a vision of fully coast-to-coast banking. That bank will have branches from Miami to Seattle and most states in between, with the exception of the Northeast.

As fast as the pace of deals may seem, in fact, mergers have been slowed down, more for personal reasons rather than business sense.

BankAmerica and Nationsbank were close to a combination three years ago, but the deal faltered over which executive would run the combined institution, where it would be headquartered and what its name would be. Similar issues have long been major sticking points for potential deals that First Chicago has been involved in.

Indeed, First Chicago chose to merge with the NBD Bank Corporation of Detroit in 1995, rather than taking more financially attractive offers from other banking companies, in order to keep its headquarters in Chicago.

Former rivals

Any transaction this size has myriad unintended consequences. For example, Nationsbank last year bought Montgomery Securities, a San Francisco brokerage firm. BankAmerica, about the same time, bought one of Montgomery's archrivals, Robertson Stevens, also of San Francisco. Now these two brokers are likely going to be combined, even though they likely would not have agreed to sell themselves if they had known this would be the result.

David Berry, research director at Keefe, Bruyette & Woods, a New York investment bank, is among analysts who have been predicting just such mergers. In an article published Sunday in The New York Times, he cited First Chicago and Banc One as potential partners, as well as Nationsbank and BankAmerica.

Berry wrote that First Chicago made an alluring merger candidate because of its strong credit card business, a leading presence in Chicago and a solid middle-market banking business in the Midwest. And because of its proximity, Banc One, based in Columbus, Ohio, would be a logical partner for First Chicago, he said.

Berry also saw reasons for BankAmerica and Nationsbank to link up.

``If you want to get really big, a combination of BankAmerica and Nationsbank would meet that criteria,'' Berry wrote in The Times. ``It has a lot of the same characteristics as the Citicorp-Travelers deal.''

Referring to the chairman of Nationsbank, Barry added, ``If you are Hugh McColl and are interested in being a major player in the consolidation of American banking, a merger with an institution like BankAmerica has to look interesting.''

These latest deals would continue the wave of mergers and consolidations that has swept the once-staid banking industry in the last year. In 1997, in the two biggest banking mergers to that point, First Union struck a $17.1 billion deal for Corestates, and Nationsbank agreed to the $15.5 billion purchase of Barnett Banks.

And just last month, the nation's two largest savings and loan companies, Washington Mutual Inc. and H.F. Ahmanson & Co., which had been intense rivals in the takeover game, agreed to merge in a $9.9 billion stock swap that would create a West Coast behemoth with $149.2 billion in assets - a company with the heft to compete with the new giants of consumer banking.