Lost in the fanfare of the costliest merger agreement in U.S. banking history-bringing together $204 billion of assets and more than 2,700 branches up and down the East Coast-was its considerable impact on First Union Corp.'s corporate side.

First Union will firmly establish itself as a member of the wholesale banking elite. And these activities will be overseen by none other than Terrence A. Larsen, who as CoreStates Financial Corp.'s chief executive officer long resisted exactly the kind of deal his board ratified this week.

The sixth-largest U.S. banking company, Charlotte, N.C.-based First Union was already strong in business and commercial lending and had a growing presence in capital markets.

But the corporate activities' profile was lower than that of First Union's retail network. CoreStates' wholesale strengths will correct the imbalance, notably in processing and other noncredit areas.

For example, First Union would become the No. 3 cash management bank, trailing BankAmerica Corp. and NationsBank Corp., with $700 million of annual revenue.

"Wholesale services were probably the most important part of this whole deal," said Nina Archer, First Union senior vice president and head of cash management.

"The acquisition certainly strengthens First Union's hand as a wholesale commercial bank, no question about it," said Richard Poje, partner of Treasury Strategies Inc., Chicago.

First Union made a play for market share in the Delaware-New Jersey- Pennsylvania region where CoreStates was concentrated, said Goldman, Sachs & Co. analyst Sally Pope Davis. "But it is also (getting) a very strong corporate bank. Congress Financial is a real gem, for instance," she said, referring to the asset-based lending subsidiary that has grown at a compound 20% annual rate since 1987.

Given CoreStates' corporate strengths, First Union officials said of the $194 million in revenue enhancements expected by 1999, $130 million would come from capital markets and $45 million from capital management.

David Bochnovic, executive vice president at Phoenix Hecht, a consulting firm in Research Triangle Park, N.C., said First Union's "huge capital markets group will have a great franchise to cull from in the Northeast."

Designated vice chairman of corporate banking and joining First Union's office of the chairman with CEO Edward Crutchfield and president John Georgius, CoreStates chairman Larsen appears to have gotten the leadership post that company watchers said he was angling for.

Much outside comment focused on the "social issue" of Mr. Larsen's role and fate. Mellon Bank Corp.'s failure to accommodate his wishes was widely believed to have doomed its $18 billion bid for CoreStates several weeks ago.

Mr. Larsen declined to answer a question Wednesday about his personal requirements, but Mr. Crutchfield dismissed the issue as "absolute bunk." He said Mr. Larsen "did not want it to be a consideration" in negotiations.

Mr. Larsen said CoreStates wanted a "partner that could provide opportunity on all fronts." He said the companies have "very strong compatibility in overall values and in approach taken to customers." He praised First Union's designation of Philadelphia as regional and corporate banking headquarters and commitment to add 3,000 jobs in the city to offset layoffs.

Mr. Larsen's corporate banking focus-including specialized industry lending, large corporate lending, investment banking, merchant banking, leasing, international, and funds management-seems to fit his interests, preferences, and achievements. "CoreStates has some distinctive capabilities in middle-market lending, commercial finance, and international" areas, said James M. McCormick, president of First Manhattan Consulting Group.

But others pointed to the likely surfacing of cultural differences as the merger proceeds, and to the lingering impression that CoreStates stumbled in its own post-merger integration of Meridian Bancorp of Reading, Pa.

The observers said Mr. Larsen might thus find it difficult to be the stabilizing force that Anthony P. Terracciano, the former CEO of First Fidelity Bancorp., was after First Union acquired his company in 1995. Mr. Terracciano will retire as president of First Union at yearend.

In addition to the corporate banking role, Mr. Larsen will serve as senior officer for the Northeast region and oversee the integration into a five-state organization with combined banking assets of $80 billion.

"Odds are the first five things Terry recommends will be greeted with, 'Gee, that's nice but we don't do it that way,'" said one person familiar with both CoreStates and First Union.

"I would, frankly, be surprised if (Mr. Larsen) stayed on," said Peter Burns, managing director of the financial institutions center at the University of Pennsylvania's Wharton School.

"I think part of the thing that attracted him to this deal is he could maintain some sort of management position in Philadelphia," said Mr. Burns.

"There's not much room for error," he added. "When you trip, there's much more serious consequences."

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