First Union Corp. chairman Edward E. Crutchfield predicted that U.S. and foreign banks will be buying equity stakes in each other as a likely prelude to mergers.

"I see ourselves sitting down with a Deutsche Bank or an HSBC Holdings and saying, 'Let's buy 20% of each other,'" Mr. Crutchfield said Monday at the annual meeting of the Bankers Association for Foreign Trade.

He suggested cross-shareholdings could be gradual steps toward creating globe-spanning institutions. Even short of an outright merger, members of such alliances could combine to offer a consistent range of international banking services.

"We're not there yet," Mr. Crutchfield said of the possibility of full- scale multinational mergers. "But I don't have any trouble visualizing a $1.5 trillion global institution, and I'm not talking about (waiting until) 2005."

David A. Coulter, chairman of BankAmerica Corp., and Charles K. Gifford, chairman of BankBoston Corp., also spoke at the international bankers conference. But their comments were overshadowed, as Mr. Crutchfield was the first U.S. bank executive to state so publicly that cross-border alliances are on the horizon.

Until now, with acquisition activity confined to the domestic market, a few U.S. banks have formed only limited partnerships with foreign counterparts.

One banking industry observer said cross-border mergers are an increasing possibility, especially between U.S. banks and globally minded British, Dutch, and Swiss institutions.

"I can see that happening with foreign banks that are globally oriented and have a large presence in the United States," the source said. But any such speculation could become academic if there is a serious downturn in the international economy.

During an hour-long address, Mr. Crutchfield said alliances with European banks are not likely to occur until there is further consolidation in the European financial industry.

He also said that any initial investments between a bank like his and an overseas company would have to involve cash because of complications in cross-border exchanges of stock.

"Do Europeans want First Union paper?," Mr. Crutchfield asked. "Probably not yet."

But as such banks get bigger and better known globally, he said, stock swaps could become feasible.

First Union has raised its international banking profile through the merger it consummated a week ago with CoreStates Financial Corp. of Philadelphia, which was strong in funds transfers and trade finance.

First Union executives at the Bankers Association for Foreign Trade meeting said CoreStates can use First Union to extend its domestic reach and gain access to advanced technology, while First Union can use CoreStates' correspondent bank network to funnel capital markets and other banking products abroad.

Outlining BankAmerica's strategy for expanding internationally, Mr. Coulter said its pending merger with Charlotte, N.C.-based NationsBank Corp. will create "a banking powerhouse and a platform of exceptional strength for expanding in Latin America, Asia, and other markets."

The banker added that technology, growing competition, and globalization are driving BankAmerica's international thrust.

"Banks have grasped the necessity of competing on a global scale," Mr. Coulter said. "Technology has made it possible for banks to manage their operations worldwide, deregulation has fostered competition, and the United States is becoming a nation of multinational corporations and trade- oriented companies."

Mr. Gifford contended that size is not the most critical element of success. He said BankBoston plans to stick to its current focus on growth in Latin America and Asia. Moreover, international revenues would soon account of 30% of the bank's total, up from 20%, or $1 billion, last year.

"History has not yet proved that size alone is the key ingredient," Mr. Gifford said.

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