SAN FRANCISCO - Answering the biggest question about their planned merger, Union Bank and the Bank of California said Thursday that the deal should save $90 million annually by 1998, or about 9% of anticipated noninterest expenses this year.

The banks say they expect to realize $10 million of the savings next year and $60 million in 1997. They also said they expect to cut 8.5% of the combined roster of 9,900 full-time jobs, mostly through attrition.

The merger will be accretive to earnings starting in 1997. Bank officials told analysts they expect to reduce the combined bank's efficiency ratio below 60%, from 64% to 65%, said Lawrence R. Vitale, an analyst with Bear Stearns & Co.

John A. Rice Jr., Union Bank's investor relations manager, said the company is not prepared to disclose specific cost-cutting measures, such as how much of the savings would come from staff reductions, office closings, and back-office consolidations. Nor would the bank disclose which executives would lead the primary business units.

James M. Rosenberg, a bank stock analyst at Lehman Brothers Inc., called the reductions modest. "The cost cuts were at the lower range of what I was expecting, and the timetable for achieving them seems very genteel," he said.

But he added that this shouldn't be surprising, since both banks are controlled by Japanese companies. "The Japanese tend to be more paternalistic than many American companies," he said.

Bank of Tokyo owns 72% of Union Bank, while Mitsubishi Bank Ltd. owns Bank of California. The two Japanese banks plan to merge on April 1 to create the world's biggest bank, the Bank of Tokyo-Mitsubishi Ltd. The Japanese banks also plan to merge their California subsidiaries into a holding company that will be called Union Bank.

In California, the combined banks will have $25.9 billion of assets. Based on assets at the end of the second quarter, the new bank would be the fourth-largest banking company in California, and the 34th-largest bank holding company in the United States.

Currently, Bank of California has just over $7 billion of assets, and 46 branches in California, Oregon, and Washington. Union Bank has over $18 billion of assets, and more than 200 branches throughout California.

"I am enthusiastic about the business opportunities and synergies created from the combination of Union Bank and the Bank of California," said Kanetaka Yoshida, Union Bank's president and chief executive, who will retain those positions in the new bank.

"Both Union Bank and the Bank of California have complimentary strengths in commercial markets, trust services, specialized lending, international banking, treasury services, private banking, and retail markets."

The two banks also disclosed further details about the merged company's ownership structure. Public shareholders in Union Bank will end up with approximately 19% of the new California holding company, while the parent bank in Japan will own the rest.

Mr. Rosenberg said this seemed in line with his expectations.

There also will be changes in the charters used by the two banks. Currently, Union Bank is a state-chartered commercial bank operating only in California.

The Bank of California has a national charter, and has five of its branches in Oregon and Washington. Most of Union Bank's assets and liabilities will be merged into Bank of California. The merged bank will keep the national charter, and will be renamed Union Bank of California.

Along with the cost savings, the merger will result in substantial expenses. For example, a pretax restructuring charge of approximately $90 million is expected to be made in the second quarter of next year.

Union Bank will also incur expenses from changing its accounting method for goodwill stemming from the 1988 acquisition of Union Bancorp by California First Bank.

This means that earnings will be restated and reduced by $12 million a year since 1988. The change is expected to continue to reduce earnings for the next eight years.

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