CEO's Absence Raises Talk That U.S. Bancorp May Be on Brink of a Big

In a sign of how thoroughly merger fever has consumed bank investors, talk at this year's UBS Securities bank conference centered on a man who wasn't even there, U.S. Bancorp chief executive John F. Grundhofer.

Mr. Grundhofer, scheduled to speak early Thursday afternoon at the CEO- laden event, scratched his appearance on short notice because, said a bank spokesman, the time could not be found to fit his schedule.

The spokesman declined to say where he was, citing company policy stemming from his 1990 kidnapping.

Institutional investors and analysts attending the conference in New York immediately speculated that Mr. Grundhofer's absence had less to do with scheduling conflicts than with preparing another acquisition.

"He canceled because he's probably doing his next deal," said UBS Securities bank analyst Thomas H. Hanley, who told the audience: "You're going to see three of four more large deals in the next month, and maybe two even sooner than that!"

Perhaps the champagne stirred the merger-minded crowd. Staff at the posh Pierre Hotel on Fifth Avenue distributed half-filled glasses of bubbly before Mr. Hanley's pre-luncheon speech on investors having reached "bank heaven." Snippets of Handel's "Messiah" and Led Zeppelin's "Stairway to Heaven" filled the air.

Investors and analysts have frequently suggested that Minneapolis-based U.S. Bancorp has its eyes on Wells Fargo & Co. or possibly KeyCorp.

On Thursday, a strong day for bank stocks overall, Wells Fargo shares rose 3.77%, compared to 1.92% for the Standard & Poor's bank index.

Mr. Hanley told investors at the conference that Wells Fargo, California's last big independent big bank now that BankAmerica Corp. has agreed to sell, would be worth $450 per share in a merger with U.S. Bancorp.

Acquiring Wells Fargo, one of the legendary names in U.S. business, would be delicious for Mr. Grundhofer, a native Californian. In 1996 his company, then called First Bank System Inc., lost to Wells Fargo in the hostile takeover war for First Interstate Bancorp.

KeyCorp is mentioned as another possibility for Mr. Grundhofer, because U.S. Bancorp is the only big bank that has significant geographic overlap with the sprawling company. That means U.S. Bancorp could probably cut more costs from a KeyCorp acquisition than any other banking company.

KeyCorp, the product of the 1994 merger-of-equals between Society Corp. of Cleveland and KeyCorp of Albany, N.Y., has branches in New York, Vermont, Maine, Ohio, Michigan, Indiana, Washington, Idaho, Oregon, Colorado, Alaska, and Utah. Its shares have long underperformed the "bank heaven" stock market.

KeyCorp, whose shares closed $39.75 Thursday, up 68.75 cents, would be worth $60 per share in a sale to U.S. Bancorp, Mr. Hanley said Thursday, or a 51% premium.

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