Beneficial National Bank, Wilmington, Del., will probably be put on the block after Household International buys Beneficial Corp., according to an internal memo.

Household will "most likely sell the branch banking system and local consumer and commercial loan relationships" of the eight-branch, $406 million-asset unit, said a May 12 memo from Bob Pierce, president of Beneficial National Bank, and Chuck Colip, president of Household Bank.

A partnership with H&R Block Inc. has made Beneficial National Bank No. 1 in tax refund anticipation loans in the country. The bank also has commercial, mortgage, and community lending divisions.

Last year the unit funded $8 million of tax refund loans. The business is to be run through Household's thrift in Prospect Heights, Ill., a spokesman said.

"We very much intend to keep the business," he said.

The company is holding meetings today with the Delaware bank's 180 employees to discuss how they would be affected.

Analysts estimated that the bank would fetch about $30 million. Household has said it would abandon Beneficial's bank charter in favor of its thrift charter.

H&R Block, Kansas City, Mo., has had a long relationship with Beneficial, said Frank Salizzoni, chief executive of the tax specialist, and Household would be "foolish" not to continue the alliance.

But the refund anticipation business has been declining in recent years, he noted. H&R Block expects to fund about 50% fewer refund anticipation loans in 1998 than in 1997, he said.

Improved technology at the Internal Revenue Service is to blame, he said. Because the IRS is making refunds faster than it used to, "people are saying, 'Why pay the extra amount?'" for the loan, he said.

H&R Block generated $999 million of tax preparation and electronic filing fees from January to March 31, 10% more than the year before.

Beneficial and Household would "find a buyer who is most interested in maintaining our presence in the market, continuing our commitment to the community, retaining and expanding our customer relationships, and keeping as many of our associates as possible," the memo said.

The companies would also "strive to find positions within the merged Household/Beneficial entity for associates not included in a sale" of the Delaware bank, the memo said.

Household has said it would take a $1 billion charge for costs associated with the merger.

Household agreed in April to pay $8.65 billion for Beneficial in a deal that is expected to create a finance company that would rival Associates First Capital Corp., Dallas.

Household has said that it intends to cut 300 branches, and it is expected to tell employees this week which branches will go.

Last week, Beneficial executives notified employees that three of the company's mortgage units would be shut or restructured, affecting 300 jobs. Beneficial's home equity unit in Dallas and its Personal Mortgage Corp., Brewster, N.Y., will be shut down, a company memo said. And Beneficial Mortgage Corp. will be merged into Household's operations.

In late April, Household announced that it was merging the two companies' private-label credit card and insurance businesses and appointing Beneficial executives to lead them.

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