FLEET <FLT> AIMS TO SPEED MERGER WITH NORSTAR
Fleet Financial Group hopes its
proposed merger with Norstar Bancorp <NOR>, ranked as the
largest U.S. banking merger, can be completed by the beginning
of 1988, according to an executive of Fleet.
    Robert Lougee, director of corporate communications for
Rhode Island-based Fleet, told Reuters the company is exploring
the possiblity of seeking a change in the national trigger date
for the state's reciprocal bank law to Jan 1, 1988 from July
one. The decision is up to the Rhode Island legislature.
    The merger plan was announced in a midday news release that
said the deal, worth about 1.3 billion dlrs, would be
consummated July one when Rhode Island barriers to interstate
banking outside of New England come down. "If we can consummate
the deal earlier that would be better for all concerned,"
Lougee said. He said to the best of his knowledge a change in
the Rhode Island law would not be a hardship for any other
banking institution in the state.
    He said Fleet is optimstic Connecticut law, which only
permits interstate banking mergers within New England, can be
amended. Fleet owns First Connecticut Bancorp.
    If the Connecticut law is not amended in time, Lougee said,
an option would be to spin off that unit with repurchase
provisions.
    The New England reciprocal banking laws have excluded New
York as a means of protecting regional banks from being gobbled
up by the money center giants.
    Wall Street analysts said the merger accord between Fleet
and Albany, N.Y.-based Norstar demonstrates the rapid pace of
interstate banking mergers since state legislatures begain
permitting regional mergers on a reciprocal basis. The U.S.
Supreme Court decided in mid-1985 to permit the mergers.
    Fleet and Norstar in a joint statement billed the proposed
merger as "a partnership of two companies." Both will continue
to operate existing headquarters after the merger.
    Norstar holders will receive 1.2 Fleet shares for each one
of theirs following Fleet's previously announced two-for-one
split. Fleet shares closed today at 59-1/2, up 1/8, giving the
deal an indicated value of 1.3 billion dlrs.
    That topped the proposed merger of Los Angeles-based
Security Pacific Corp <SPC> and Seattle's Rainier Bancorpartion
<RBAN>. The West Coast deal, announced about four weeks ago, is
worth an estimated 1.2 billion dlrs.
    Chemical New York Corp's <CHL> acquisition of Texas
Commerce Bancshares last year was valued at about 1.2 billion
dlrs, making it similar in size to the Security Pacific-Rainer
deal. The California combination of Wells Fargo and Co <WFC>
and Crocker National Corp last year was worth 1.1 billion dlrs
and there have been several bank mergers in the southeast
valued in the 700-800 mln dlr range.
    "It's a merger of equals," said analyst John Rooney of
Moseley Securities Corp. He said Norstar had a book value at
the end of 1986 of 19.63 dlrs per share, while Fleet's book
value was 28.02 dlrs.
    Rooney noted that Norstar chairman Peter Kiernan is in his
60's while Fleet's Terrence Murray is in his late 40's. He said
Kiernan would probably head the combined company until his
retirement then Murray could assume the top post.
    Analyst Thaddeus Paluszek of Merrill Lynch and Co said
Fleet's earnings would have been diluted about two pct in 1986
on the basis of the merger terms announced today.
    He noted that Fleet has a "teriffic reputation" after
having diversified in a number of financial areas. Fleet has
established consumer banks in the southeast and is known as an
innovator in securitization of mortgages.
    The merged banks would have assets in excess of 25 billion
dlrs and be one of the 25 largest banks in the U.S.  Norstar
operates in most of New York state but not in New York City.
    Lougee said at some point in the future banking operations
that both Norstar and Fleet operate in the state of Maine would
be combined.
    The agreement between Norstar and Fleet includes a
"lock-up" option designed to deter other acquirers. Each
granted the other an option to purchase authorized but unissued
shares amounting to 24.99 pct of the fully diluted shares
outstanding.
 Reuter
