Bank of America is launching an agribusiness finance unit at its Chicago subsidiary and staffing it with specialists hired away from some of the biggest agriculture banks in the Midwest.

Farm lenders in the region said the giant San Francisco bank's push would add a major new competitor to the bevy of $3 billion- to $10 billion- asset banks in the Midwest that finance large grain, dairy, and pork producers.

"I have never competed with Bank of America for anything," said the head of agriculture lending at a midsize commercial bank in Illinois, who wished not to be named. "But I expect to real soon."

At the same time, Bank of America could fill a void in several states, particularly Illinois. Virtually no Illinois "agriculture bank" - defined as one having 25% or more of its total loans in agriculture - is larger than $300 million of assets. For banks smaller than that, loan-to-one- borrower limits restrict their ability to lend to many corporate farms.

Bank of America said it expects to target producers in the "food and fiber system" with revenues of at least $10 million or as much as $500 million. As a result, its entry may have little effect on community bank lenders.

"That doesn't worry me much," said Bill Dale, head of agriculture lending at Farmers National Bank of Geneseo, Ill., a $178 million-asset bank. "Their target market would exceed the revenues of the bulk of our clientele."

"Their floor would be" higher "than our ceiling," agreed another Illinois farm banker.

Bank of America's Midwest agriculture operation, therefore, will go up against an elite group of large lenders in the agriculture business: primarily Minneapolis' Norwest Corp., Chicago's Harris Trust and Savings Bank, the Farm Credit System, and Dutch-owned Rabobank.

"We expect to play strongly upon our knowledge and experience base, product range, capital-raising expertise, and international capabilities to meet the expanding needs of the market," said Mark Acheson, executive vice president and head of commercial banking at Bank of America Illinois.

Bank of America veteran Barton Francour, a senior vice president, is heading up the division and will report to Mr. Acheson.

The unit has hired Edward L. Cooper 3d away from Harris Trust and Stephen W. Phillips away from Rabobank's Chicago office. It's also put John W. Weubbe from Bank of America's Sacramento, Calif., agribusiness division on its staff.

Bank of America is already one of the biggest agriculture lenders in the West, primarily to California's wine industry. The flagship California bank has $1.2 billion of farm credits, which is 1.3% of its total loans.

Its Illinois bank, however, consists of what was Continental Bank. Continental was a corporate lender and has never had an agriculture business. Mr. Francour and crew will thus be starting from scratch.

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