Some of the biggest banking companies are eagerly gearing up to repurchase shares next year - as soon as they complete pending mergers and acquisitions, market experts say.

Many big banks have been forced to watch from the sidelines since summer as bears mauled their stock valuations on fast-developing earnings concerns stemming from global economic woes.

Repurchase activity among the top 25 banks, curtailed by regulatory necessity after a bout of big merger deals in the spring, hit a two-year low during the third quarter, according to Keefe, Bruyette & Woods Inc.

Repurchasing shares is one of the least risky ways a bank can deploy excess capital while improving earnings ratios and helping shareholders by supporting its stock's price.

However, buybacks had declined for several quarters through last spring, because bank stocks had reached such rich valuations that repurchases were considered uneconomic as a capital management tool.

Moreover, a wave of mergers was under way. The Securities and Ex-change Commission bars companies from buying back stock for six months after a merger that uses pooling-of-interests accounting.

Now, with bank stocks at relative bargain prices, the buyback trend is expected to abruptly change in the months ahead.

"We are getting close to the bottom," said bank analyst Marni Pont O'Doherty of Keefe, Bruyette & Woods Inc. "We are looking at the second half of next year for an increase."

Some of the big players expected to initiate buyback programs for their stock next year are BankAmerica Corp., Wells Fargo & Co., SunTrust Corp. and Citigroup.

Indeed, repurchasing bank stocks could become even more popular than it was before, according to some analysts. After a rocky third quarter, and with economists predicting a slowdown, buyback programs are looking more attractive than ever.

At the same time, many market experts also expect a slowdown in mergers and acquisitions-an alternative way of deploying excess capital-because of the year-2000 computer conversion issue.

"Investors are becoming more skeptical about banks growing for growth's sake," Ms. Pont said. "They also do not want banks to do riskier loans. If banks are making their earnings estimates through buybacks, investors are more inclined to turn an eye toward them."

A third way banks can deploy excess capital is by increasing dividends, but analysts still expect banks to largely opt for repurchase programs.

"Typically, bank managements prefer to deploy excess capital through buyback programs than through dividends," said bank analyst Lawrence W. Cohn of Ryan Beck & Co. in Livingston, N.J. "It gives them more flexibility. If banks stop buying back your stock, investors are not going to mind as much as if a bank lowers it dividends."

Repurchase activity for the top 25 banks fell slightly, to $1.9 billion in the third quarter, from $2.9 billion in the second quarter, and from $3 billion in the first, according to Keefe Bruyette.

The most aggressive purchasers of their stock in the third quarter included U.S. Bancorp, which bought back $448 million of their stock; Chase Manhattan Corp., $400 million; Wachovia Corp., $320 million; and BankBoston, $120 million.

Ms. Pont estimated that buyback activity for the top 25 banks could jump to $2.3 billion if banks become particularly aggressive.

Indeed, National City Corp. announced Tuesday that it plans to repurchase $2.7 million of their shares, and Fleet Financial Group Inc. said on Oct. 21 that it would repurchase $1.5 million of its shares.

But though investors like buybacks, ratings agencies do not. Bank analyst Charles Rauch of Standard & Poor's said that ratings agencies tend to look unfavorably on stock repurchase programs because they can cause material declines in capital.

Standard & Poor's downgraded Wachovia Corp. recently, because aggressive repurchasing of stock had cut into its capital.

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