Despite the rumors, commercial banks are unlikely to dump their charters to form massive financial conglomerates.

That's because "debanking"-a threat often made by frustrated executives- sounds a lot better in theory than in practice.

Surrendering its charter would cost a commercial bank access to the payment system and deposit insurance. What's more, operating branches in foreign countries would be nearly impossible.

"It would be a very, very tough road to take," said H. Rodgin Cohen, a partner with New York law firm of Sullivan & Cromwell.

Still, the market was intrigued recently when bank analyst Thomas H. Hanley with UBS Securities insisted insurance giant Travelers Group would merge with Bankers Trust New York Corp.

Because banks are barred from insurance underwriting, the deal could only happen if Bankers Trust turned in its charter.

The biggest argument against such a move is losing access to the Federal Reserve's payments system. The ability to quickly and efficiently move large amounts of money is crucial for banks with big institutional customers, such as Bankers Trust and J.P. Morgan & Co.

"The real spear that has always been in the side of debanking is payment system access or the lack thereof," said Karen Shaw Petrou, president of the Washington-based consulting firm ISD/Shaw Inc.

"If you get into the high-dollar stuff, you really need the Fed," agreed William B. Nelson, executive vice president of the National Automated Clearing House Association.

Giving up a banking charter also means giving up deposit insurance.

Without the government's guarantee, it would cost more to attract funds. The institution also would risk losing customers looking for safety.

Finally, forfeiting a bank charter would make it tough to operate overseas. Supervisors around the world have agreed that a bank's home- country supervision must meet certain standards. Without a bank charter in the United States, foreign country supervisors could ban a company from doing business.

"A foreign bank regulator can say, 'You can't bank here because you're not a bank in your home country,'" Ms. Shaw said.

The idea of shedding the bank charter has appealed periodically to chief executives.

In 1986, Thomas G. Labrecque threatened that Chase Manhattan Bank would drop its charter if Congress didn't allow banks to enter new corporate finance businesses. The tactic failed, and Congress still hasn't repealed the Glass-Steagall Act.

In 1993, Wells Fargo & Co. considered the less drastic step of gaining broader powers by converting to a thrift charter. The San Francisco banking company dropped the idea, fearing flack from Congress.

Old Stone Bank of Providence, R.I., interested in the thrift charter's more liberal branching rights, did convert in 1984.

Some argue that debanking is becoming a more viable option.

"The prospect of a bank giving up its charter is a lot more realistic than it was several years ago," said a general counsel at a major commercial bank. "Congress hasn't done anything proactive to change the marketplace scenario," he said.

"Besides, depositors aren't as worried about whether their accounts are insured, and think about all the regulations you have to deal with because you're an insured depository."

Others maintain there is an easier option: A major insurance conglomerate could acquire a commercial bank and then convert the institution to a thrift.

This would preserve payment system access and deposit insurance, although the institution would have to spin off most of its commercial lending operations and beef up its residential mortgage portfolio.

"Because the thrift allows affiliation between an insurance company and a depository institution, it provides another strategic option," said Robert R. Davis, director of government relations for America's Community Bankers.

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