WASHINGTON -- BankAmerica Corp. plans to transfer its institutional trust divisions to its Oregon thrift subsidiary, setting the $379 billion unit up for interstate expansion.

The nation's second-biggest bank is likely to win approval for the move from the Office of Thrift Supervision later this month, according to regulatory sources and a person familiar with the reorganization plan. OTS refused to comment.

BankAmerica spokeswoman Sharon Tucker said the move "should enable us to dramatically simplify and streamline the legal structure and organization of the institutional trust business."

Richard M. Rosenberg, BankAmerica's chairman and CEO refused to comment, as did other bank executives.

The move should give BankAmerica's trust department far more flexibility, because thrifts are allowed to branch interstate. But sources said the restructuring was prompted in part by past criticism from regulators.

When BankAmerica completed its merger with Security Pacific in April 1992, the combination of the two trust-operations produced a convoluted organizational structure. The Federal Reserve and the Office of the Comptroller of the Currency have criticized it in exam reports for being badly run and needing centralization, a regulatory source said.

BankAmerica's Ms. Tucker would say only that "both organizations had spiderwebs of legal entities through which then trust businesses were conducted."

The $197.5 billion-asset bank's Portland, Ore.-based thrift subsidiary, Bank of America FSB, will oversee the institutional trust business. The thrift has $3.8 billion of assets. The plan will give it an additional $379 billion of assets under administration. Trust assets do not qualify for deposit insurance.

Early Branching Approval

The Portland thrift has already won preapproval from the Office of Thrift Supervision for roughly a dozen interstate branching applications, the source said. That would allow the thrift to expand its trust operations in those states almost immediately. San Francisco-based BankAmerica now has operations in eight states.

National banks can only conduct trust activities in states where they operate, but thrifts may branch interstate.

The BankAmerica move will also represent new territory for the OTS. It now supervises just $9.3 billion in trust assets, up from $4.3 billion in 1993. After it approves the BankAmerica addition, the OTS will supervise $388 billion, with the Bank of America thrift dwarfing all other thrifts in the trust business.

Private Bank Manages $30B

In addition to its giant institutional trust holding, BankAmerica's private bank has $30 billion of assets under management, a portion of which is in the private trust department.

The restructuring also will represent the first time the OTS has supervised a bank agency offshore. BankAmerica trust holdings include a London office, which will be allowed to to accept deposits for the first time under the thrift charter.

The OTS plans to require the thrift to hold $50 million in capital above its current well-capitalized standard by the time it adds all the trust assets, the regulatory source said. The bank plans to move the trust department .in five stages, triggering the-new requirements gradually.

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