Banks: Looking for Security

Amid the sudden-death dealmaking of the past decade, the world of banking seemed like an island of restraint. But recently the industry has come down with a case of can-you-top-this fever. The latest combination is the largest in banking history, the merger of San Francisco-based BankAmerica with its smaller Los Angeles rival, Security Pacific. With $193 billion in assets, the enlarged BankAmerica will rank a close second to New York's Citicorp among U.S. banks.

The merger could eventually reap savings of $1 billion annually for the two institutions as they combine functions and reduce overhead. This may mean layoffs of up to 10,000 workers, or 11% of the work force, as excess branches and departments are closed. But the merger with the revitalized BankAmerica was a necessary maneuver for CEO Robert Smith's troubled Security Pacific, which has been weakened by bad real estate loans. BankAmerica will now be a force in 10 Western states, and is reportedly considering a bid for New England's Shawmut National as well.

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CREDIT: [TMFONT 1 d #666666 d {Source: Keefe, Bruyette & Woods}]CAPTION: New top 5 U.S. banks following mergers