The American Bankers Association and America's Community Bankers shocked their rivals Monday by announcing plans to merge.

The boards of each group voted separately over the weekend to combine their associations by mid-2000. By yearend details are to be worked out by a committee of bankers, four officers from each association.

Membership in the new associ-ation-which has not yet been named- initially would be open to any financial institution backed by the Federal Deposit Insurance Corp. Eventually insurance, securities, and other companies would be invited to join.

Indeed, sources said Monday that the Financial Services Roundtable-which represents the 125 largest banking companies-has already expressed interest in becoming a third merger partner. The recently renamed roundtable is angling to become the central trade group for the broader financial services industry.

"It is very compatible to what we are developing," said roundtable president Steve Bartlett. "The industry needs to consolidate trade organizations" to reflect market and legislative changes.

Gary E. Hughes, vice president and general counsel of the American Council of Life Insurance, said insurance companies will always need separate representation because they are uniquely regulated.

But he said his group, the ABA, and other securities and insurance groups will soon unveil a "coordinating council" to lobby common interests such as privacy, retirement savings, accounting rules, and international matters.

The ABA and the ACB have been talking about getting together for years, but their opposing positions on financial reform has always been a stumbling block.

ABA president R. Scott Jones and ACB chairwoman E. Lee Beard told reporters Monday that they started talking about a merger five months ago in reaction to industry consolidation and out of a concern that financial services needs a unified lobbying front in Congress.

"The industry is stronger whenever we can come to any issue with a common voice," said Ms. Beard, who is also the president and chief executive of First Federal Bank in Hazleton, Pa.

Despite the intense rivalry between the two groups in the past, "our common interests were really overwhelming," said Mr. Jones, who is also the chairman and chief executive of Goodhue County National Bank in Red Wing, Minn. "The differences were only at the margin."

Despite hopes a merger could smooth the way for the reform bill, neither the ABA nor the ACB has backed off the main issue dividing them - whether commercial companies should be permitted to buy unitary thrifts. The ABA remains staunchly in favor of banning such transactions, but the ACB opposes any such limits.

Mr. Jones said Congress is expected to decide that issue in the next few weeks-long before the trade association merger is completed. Both executives said the merger efforts would continue even if reform legislation fails.

From 1993 to 1998 the ACB's revenue fell nearly 23%, to $17 million, and membership fell to 1,480 institutions from more than 2,000. The ABA said its revenue rose 24%, to $76.2 million, in the same period. Mr. Jones said consolidation trimmed ABA membership to about 6,000 this year, but he refused to disclose any figures from past years.

Some observers said the differences between the ABA and the ACB over reform and the residual animosity from the savings and loan crisis in the late 1980s represent too wide a gulf to bridge.

Kenneth A. Guenther, executive vice president of the Independent Community Bankers of America, predicted the ACB's rank and file will oppose a union with the ABA. "This proposed merger is not in the best interests of smaller thrifts who will be politically disenfranchised," he said.

Others said that political and economic forces are making banking organizations put their differences aside for mutual survival. And ACB president Paul A. Schosberg's planned departure in December leaves a leadership vacuum.

"It is a natural," said Thad Woodard, the president of the North Carolina Bankers Association, which merged with the Community Bankers Association of North Carolina in 1997. "The result would be advantageous to banking, to clarify the voice of banking."

Banking and thrift groups have also merged in Florida, Tennessee, and other states.

But some efforts have failed, notably merger talks last year between the California Bankers Association and the Western League of Savings Institutions. Political disputes, akin to those between the ABA and the ACB, proved unconquerable obstacles.

"We were never able to reach agreement on the political issues," said Lou Nevins, the Western League's president. "We agreed on a lot, but we couldn't agree on the stuff that was most important."

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