Acquisitions by the largest U.S. banks are having their long- anticipated effect on market shares: Faster than ever, the biggest banks are getting bigger.

The top 300 banks controlled 70.5% of the approximately $3.1 trillion of total U.S. deposits on June 30, according to American Banker tabulations that include the bank rankings beginning on page 20.

The concentration measure was up a full 2 percentage points from midyear 1995, after rising 1.77, 1.44, and 1.04 in the three previous 12-month periods.

About $200 billion of deposit gains could be attributed to acquisitions by the top-300 banks in the 12-month period ended in June. Of that amount, $140 billion was acquired between January and June - just $6 billion short of the total for all of 1995.

The 300 biggest banks are on a pace to increase deposits this year by a record $280 billion; all banks showed a gain of only $154 billion in the 12 months ended June 30.

"Our predictions are that the top 300 banks, which represent only 5% of the total banking entities, will control 85% of deposits over the next few years," said Rolland Johannsen, president of Furash & Co., a Washington-based banking consultant.

"We're very clearly heading toward more oligopolistic markets," said Lawrence Cohn, a banking analyst with PaineWebber Inc.

Analysts predicted that with customers increasingly moving money into other financial instruments, competition for bank deposits will intensify. But they also noted that banks have been reluctant to raise interest rates to attract deposits.

"Need for funds for loans has been growing only slowly, and deposit pricing relative to market rates is at record lows," Mr. Cohn said. "When you look at the rate of growth in consumer deposits and compare that to growth in money market mutual funds, you can only conclude that the banking industry is slowly walking away from its customer base - or its customer base is walking away from it."

"As banks continue to fight for a bigger share of what is a somewhat smaller pie, competition will get even more intense," said Mr. Johannsen. "But I'm not sure that's going to mean any increase in rates.

Rather than using higher rates as an incentive to attract increased deposits, he added, banks are turning to other incentives, such as free checking and reduced fees in exchange for maintaining minimum balances.

"Most banks will resist the urge as much as possible to make substantial increases in rates, if only because it's very difficult to engage in promotional repricing without repricing the entire portfolio," Mr. Johannsen said.

Included in the tables on subsequent pages is a breakdown of domestic and foreign deposits at the top 10 banks. This analysis relies on pro forma data for the new Chase Manhattan Bank, formed on July 14 after the merger with Chemical Bank.

Citibank, first in total deposits, was also the biggest in foreign deposits, at 79% of its $163 billion of total deposits. Slightly more than 47% of Chase's $157 billion of deposits were foreign, compared with 36% of Bank of America's $122.6 billion and 90% of Morgan Guaranty Trust Company of New York's $49 billion.

In domestic deposits, the new Chase Manhattan ranked first with $83.2 billion. Then came Bank of America with $78.1 billion, Wells Fargo Bank with $70.5 billion, NationsBank with $34.9 billion, and Citibank with $34.4 billion.

Analysts said several factors have contributed to faster concentration.

As banks seek to add market share to compensate for slow growth, many are picking up thrifts or branches of thrifts. Over the first half, banks acquired $42.6 billion in thrift deposits, up from $18.6 billion in all of 1995. Banks have almost matched the record $44 billion acquired from thrifts in 1991.

"Probably the single biggest issue is the death of many thrifts," Mr. Cohn said.

Another factor: many of the high-profile mergers of bank holding companies during the second half of 1995 are only now resulting in formal mergers of the subsidiary banks.

In the rankings by assets, Citibank was on top in June with $226.9 billion. But its 13-year reign came to an end July 14, the day Chase and Chemical Bank became one. Had the merger taken place by midyear, Chase would have been first at $271.2 billion.

However, Citibank will continue its 11-year streak as the deposit- taking leader. The new Chase would trail by about $5.7 billion, at $157.4 billion, supplanting Bank of America, San Francisco, as the second largest in deposits.

The last year Chase Manhattan topped American Banker's deposit list was 1945, when it had $5.7 billion.

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