Following the lead of others moving towards interstate branching, BayBanks Inc. of Boston announced plans to merge its three banks covering Massachusetts and Connecticut.

The single entity, BayBank NA, will have its headquarters in Boston.

With $11 billion in assets, the bank would be among the 50 largest banks in the country. The largest BayBanks unit under the current structure, which is based in Burlington, Mass., ranked 69th at yearend 1994.

"While our multiple-bank structure has had many benefits over the years," said William M. Crozier Jr., chairman and president of the holding company, "it has been more of a challenge to communicate the depth of our financial capacity ... than if our capital and assets were on one bank balance sheet."

The company as a whole has 218 full-service branches serving 176 cities and towns in Massachusetts, Connecticut, and New Hampshire.

BayBanks is joining a trend that has been spurred in part by the 1994 federal interstate branching legislation, which will lower most of the remaining barriers to setting up multistate banks with single charters.

BankAmerica Corp. announced plans last week to combine its units in Idaho and Washington, which will be that company's first subsidiary operating bank branches in more than one state. But BankAmerica's move is coming under another rule that permits a bank to move its headquarters within a 30-mile limit, even if a state line is crossed.

Both BayBanks and BankAmerica said the mergers would allow them to streamline operations, lower some costs, and make it easier to comply with regulations.

BayBanks, which has already consolidated many of its backroom operations, is expecting a simpler payroll process and ledger reconciliation, as well as easier forms production, according to spokesman Bruce E. Spitzer.

Mr. Spitzer, however, played down the connection to interstate branching.

"There will be more operational efficiencies, no doubt," Mr. Spitzer said. "But this is a natural evolution of the direction that BayBanks has been headed in for some time."

Customers, said Mr. Crozier, should not notice any difference in their dealings with the merged bank. They have long viewed the company as one bank, he said.

Mr. Crozier will be chairman and chief executive of the merged bank. He will be joined by the presidents of the two Massachusetts banks, Giles E. Mosher Jr. of BayBank Burlington and Richard F. Pollard of BayBank Boston, in an executive management team.

Mr. Mosher will be president of BayBank NA. Mr. Pollard, who is also chairman and chief executive of BayBank Connecticut and vice chairman of the parent company, will also serve as vice chairman of the merged bank.

The merger of the Massachusetts banks is scheduled to occur in the fourth quarter, pending regulatory approval. BayBank Connecticut is scheduled to merge with BayBank Boston after the close of business Thursday.

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