National Bank of Egypt has a deal to buy New York-chartered Arab- American Bank.

The buyer would be the first Egyptian bank with a direct banking presence in the United States.

No price was disclosed. The Egyptian bank would buy out the 20 other members of the consortium that own Arab-American.

Fakhruddin Khalil, chairman of Arab-American, said the acquisition would end to crippling differences among current shareholders.

Mr. Khalil added that it would also let the bank expand its trade finance and correspondent banking operations between the Middle East and North and South America and move into new areas, such as private banking, project finance, and investment banking.

Divisions of opinion among shareholders over capital increases and strategic decisions had "crippled" development by the bank, he said.

Established in 1976, Arab-American had $594 million of assets last Dec. 31. It earned $590,000 last year, down from around $2 million a year earlier and $4 million in 1995.

The bank first ran into difficulties after the Gulf War, when some of its assets were frozen, prompting U.S. regulators to insist that it add capital. In a second blow, Syrian institutions withdrew sizable deposits, fearful that their U.S. assets might also be frozen by U.S. authorities.

Mr. Khalil said that subject to U.S. regulatory approval, National Bank of Egypt plans to convert the bank into a branch. This, he added, would solve any problems related to increasing capital, since National Bank of Egypt could use its own capital base to support the activities of a U.S. branch.

National Bank of Egypt, the country's largest bank, with some $32 billion of assets, won out over a competing bid by Banque Marocaine de Commerce Exterieur. The Egyptian bank already owns 27.9% of Arab-American; Commercial International Bank of Egypt owns 18.2%.

Other shareholders include several Middle Eastern banks, the central banks of Egypt and Morocco, and the government of Oman.

Four U.S. banks-Chase Manhattan Corp., Bankers Trust Corp., First Chicago NBD Corp., and BankAmerica Corp.-also each hold less than 1% in the bank.

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