Bank Regulator OKs 2 Big Mergers : * Finance: The consolidation of Chemical and Manufacturers Hanover, as well as NCNB and C&S;/Sovran, wins approval.

The Federal Reserve approved two big bank mergers Friday, clearing the way for creation of the nation’s third- and fourth-largest banks.

The New York-headquartered Chemical Banking Corp. won permission to acquire its Park Avenue rival, Manufacturers Hanover Corp., and form a new institution with $135 billion in assets. It will retain Chemical’s name.

Meanwhile, NCNB Corp. of Charlotte, N.C., and C&S;/Sovran Corp. of Atlanta and Norfolk, Va., got the go-ahead to combine their $116 billion in assets under the name NationsBank.

The Chemical merger must still be approved by the Justice Department’s antitrust division and by state regulators in New York, New Jersey and Texas, where Chemical conducts business.

Justice Department and state approvals are also pending for NationsBank, which would become the largest financial institution in the South with operations in eight states and the District of Columbia.

Shareholders of all four holding companies approved the mergers Nov. 1.

The new banks would be exceeded in size only by Citicorp, the country’s largest banking company with more than $200 billion in assets, and by the pending combination of BankAmerica Corp. and Security Pacific Corp., two California-based banking giants.

The Federal Reserve Board, which regulates bank holding companies, considered the mergers at a closed meeting Tuesday.

At a series of meetings in October, community activists told the Federal Reserve that C&S;/Sovran and NCNB have been inattentive to the credit needs of minorities and low-income neighborhoods.

The Chemical and NationsBank deals are the most prominent of half a dozen announced this summer and fall. They are leading a wave of consolidations that is creating a system of fewer but larger banks. The number of banks is expected to shrink from 12,000 to 9,000 by the end of the decade.

Mounting loan losses, especially on real estate, are driving many institutions to seek cost savings and market dominance through mergers.

Chemical plans within three years to reduce its annual expenses by $650 million by eliminating 6,200 jobs and closing 70 branch offices in the New York area, including its old Park Avenue headquarters.