Is BankAmerica Corp. angling to buy Harris Bankcorp?

That's what a published report suggested Monday, but many observers are scratching their heads about the idea.

Crain's Chicago Business reported that BankAmerica may be close to buying the Chicago-based Harris, for about $4.2 billion, to fill a big geographic hole in its retail banking operations.

But some analysts questioned whether such a deal makes sense right now for either BankAmerica of Harris' parent, Bank of Montreal. The two supposed merger partners declined to comment.

Speculation about a BankAmerica-Harris merger has circulated for some time because many see Harris as a natural, strategic fit for BankAmerica. BankAmerica, which aspires to build a national franchise, has only a small commercial presence and no retail presence in Chicago.

"BankAmerica is new and larger, but there is a hole in the donut," said Thomas Theurkauf, a bank analyst at Keefe, Bruyette & Woods Inc.

"The Midwest is not a strength for the bank."

BankAmerica, however, is now concentrating on integrating a huge and complex merger-last year's union of NationsBank Corp. with the old BankAmerica. And many observers say a Harris deal would detract from that effort.

"The issue here is timing," Mr. Theurkauf said. "The first order of business is integration-not so much looking to do another deal."

At the same time, observers are unclear why Bank of Montreal would consider selling its robust Chicago operations.

Harris, with assets of $25.1 billion, generates more than 21% of Bank of Montreal's earnings, and all indications are that the parent is planning to increase its U.S. presence.

"Harris Bank is a distinguishing feature of the Bank of Montreal," said A. Roy Palmer, bank analyst of TD Securities. "For them to lose it leaves one with a sense of surprise."

James Keating, bank analyst of Merrill Lynch Global Securities, said he heard rumors about the merger last week but doubts it will happen.

"This is really out of left field," Mr. Keating said. "Growth opportunities in Canada are limited."

Mr. Keating said other events in Canada could be adding to the rumors.

Bank of Montreal recently gained a new chief executive officer, F. Anthony Comper, after failed merger talks last year with Royal Bank of Canada. Meanwhile, Toronto-Dominion Bank recently unveiled plans to sell a stake of its brokerage business to the public.

"These events make people wonder what is the next move for Canadian banks," Mr. Keating said.

Harris has about five times more Chicago-area deposits than BankAmerica, which has $3.8 billion.

The BankAmerica deposits came mostly from the old Continental Bank, which BankAmerica acquired in 1994.

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