NationsBank to buy rest of MNC

NATIONSBANK, America's fourth-largest banking group after the 1991 merger of NCNB and C&S Sovran, is poised to acquire the rest of Baltimore-based MNC Financial Inc for about dollars 1.5bn ( pounds 1.07bn) in the next few months.

The move will catapult NationsBank, already the biggest bank in the south and south-western US, into the dominant position in Washington DC and Maryland.

With total assets of dollars 118bn, NationsBank operates more than 1,700 branches in 10 states and the District of Columbia. It also owns the UK stockbroker Panmure Gordon.

In an innovative deal last summer, NationsBank agreed to invest dollars 200m in MNC, a 240-branch bank with assets of about dollars 16bn but brought to the brink of bankruptcy by the recession in the east coast property market.

In return, NationsBank acquired 17 per cent of MNC's shares and the exclusive option to buy the rest within five years.

Hugh McColl, NationsBank's president and chief executive officer, said that because of MNC's better-than-expected performance last year, NationsBank was likely to take up soon its option to buy the rest of MNC.

MNC has reduced its high level of non-performing loans and increased earnings faster than expected, he said during a London visit last week. 'It's reasonable to assume that we will act on our option sooner rather than later, in the first half of this year rather than the second.'

He estimated that buying the remaining 83 per cent of MNC shares would probably cost NationsBank between dollars 1.4bn and dollars 1.5bn. But the bank is feeling flush after a five-fold increase in net profits to dollars 1.15bn in 1992, the first full year after the NCNB- C&S Sovran merger.

Mr McColl, who has developed a zest for mergers in his 30-year banking career, expects few job losses or branch closures at MNC after NationsBank buys it.

It was always NCNB's aim to stretch from Baltimore south to Miami, Mr McColl said. Buying MNC would achieve that goal, and would also mean NationsBank would be nipping even more closely at the heels of Chemical Banking, its nearest rival.