Merger mania has continued in the US banking sector with four more banks announcing plans to form new alliances. BankAmerica Corp and NationsBank Corp are to join forces to create the largest bank in the US in a $60 billion merger. Meanwhile, Banc One unveiled its plans to First Chicago NBD in a $29 billion deal.
The BankAmerica Corp and NationsBank Corp merger will create a bank will overtake Chase Manhatten as the largest US bank with assets of more than £341 billion.
The new company, which will employ 180,000 staff, will be called BankAmerica Corp.
The megamerger is the latest in a wave of US deals and came just after Banc One Corp said it would walk down the aisle with First Chicago NBD Corp. The union of Banc One and First Chicago will create the fifth largest US bank in terms of total assets. The merged bank, a stock-for-stock transaction, will have offices across the United States.
The merger announcement comes as Nationsbank yesterday reported net profits of $1.139 billion for the first quarter, up 33 per cent from the $855 million for the same period last year.
The two mergers followed last week's proposed marriage between financial giants Citicorp and Travelers Group to create the world's largest financial services company worth nearly £100 billion.
The announced mergers continue a trend of consolidation in the US banking industry. Exactly one week ago, Citicorp and the financial services entity Travelers Group announced merger plans that would create one of the world's most powerful finance houses.
The newly-merged company will have relationships with 29 million households in 22 states and serve two million businesses in the United States and 38 other countries.
"We've built a truly national franchise with this ideal partnership," said Mr David Coulter of BankAmerica, who will be president of the company and will maintain his principal office in San Francisco.
"Together we will have the broadest range of products, delivered by the best people through the most extensive distribution system in the nation," Mr Coulter said.
Mr Hugh McColl (62), of Nationsbank will be the chairman and CEO of the new company and will maintain his principal office in Charlotte, North Carolina.
The merger is expected to close in the fourth quarter of 1998, pending approval from regulatory authorities.
A decision on the name of the company emerging from the BankAmerica-Nationsbank union will be made at a later time, company officials said in a statement.
The banks said the agreement will create a new holding company to be called BankAmerica Corp, although it is the desire of the boards of directors that the names of both companies be retained in one form or another.
The new company emerging from the union of Banc One and First Chicago will be called Banc One Corporation and will be based in Chicago.
"With greater economies of scale and skill, we will be an even stronger player in the financial services industry," said Mr John McCoy, who will become president and chief executive officer of the new Banc One company.
Mr Verne Istock, currently chief executive officer of First Chicago, will become chairman of the merged corporation.
"We will be able to enhance our technological capabilities and will be a major competitive force in credit cards, retail and business banking across the country," Mr McCoy said. Some analysts suggested that the mergers may hurt consumers if the banks consolidate by closing branches and raising fees.
