New York City and northern New Jersey are in a territorial war for more than 1,200 employees who work out of Bank-America Corp.'s East Coast headquarters.

The San Francisco-based bank's leases on the midtown Manhattan building expire at the end of 1993. Its new partner, Security Pacific Corp., also has several Gotham leases expiring over the next two years.

Lower costs for labor and space in the Garden State make a move "very compelling," said a real estate executive familiar with the negotiations.

BankAmerica is considering several sites on the Jersey side of the Hudson River, including space in a million-square-foot building newly erected in Jersey City and rehabilitation of some vacant space in nearby Weehawken. But New York City officials are said to be offering the bank juicy tax breaks if it stays in the Big Apple.

Officials of New York City and the bank had no comment.

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