BankAmerica, NationsBank Recently in Merger Talks : Banking: BofA sources caution there is no guarantee of a deal. Combining the two would create the largest U.S. institution.
BankAmerica Corp. has held talks recently with North Carolina’s NationsBank about a possible merger that would create the nation’s largest bank, sources said Sunday.
But BankAmerica sources also cautioned that there is no guarantee that any deal would be consummated, adding that BankAmerica has come very close before on other major deals that eventually fell apart. And, they added, discussions among major banks about possible combinations have become fairly common in this frenzied bank merger environment, in which institutions are increasingly consolidating to better compete.
Last week, San Francisco-based Wells Fargo & Co. launched a bold $10.9-billion hostile bid for rival First Interstate Bancorp of Los Angeles. Earlier this year, BankAmerica came close to striking a deal with New York’s Chase Manhattan Corp., but those talks fell apart over succession-related issues. Chase has since agreed to merge with Chemical Banking Corp. in an $11-billion deal.
On Sunday, a high-level BankAmerica source confirmed that the bank this summer talked with NationsBank about a possible merger, with one stumbling block being the location of the headquarters for a merged bank.
NationsBank is an acquisition-driven institution based in Charlotte, N.C., with offices spread largely across the South. BankAmerica, the parent of Bank of America, is based in San Francisco, with offices mostly in the West. If they combine, the two would form a coast-to-coast powerhouse with more than $400 billion in assets.
Sources said that B of A executives went so far as to suggest a compromise on the headquarters issue--Washington, D.C., because a merged operation would create the closest thing the United States has to a true nationwide bank.
A BankAmerica spokesman declined to comment on NationsBank. Officials with NationsBank could not be reached.
Unconfirmed reports of a possible combination of the two banks had been strongly rumored on Wall Street this past summer and reported in various trade publications.
Indeed, the current Barron’s financial publication suggests that BankAmerica and NationsBank may be in talks again soon. Barron’s quotes an unidentified director of NationsBank as saying that the bank has been talking to several major institutions and that BankAmerica would be “by far the best fit and makes the most sense.”
With $226 billion in assets, BankAmerica is the nation’s third-largest bank, behind the soon-to-be combined Chemical and Chase, which will rank first, and No. 2 Citicorp. NationsBank, which last month disclosed it is buying Bank South for $1.6 billion, will rank fourth with $197 billion in assets.
