The auction of the 20 failed First City Bancorporation of Texas banks promises to elicit spirited bidding.

The leading candidates are the five out-of-state giants that already dominate the Texas market and are eager to grab the last large independent franchise.

The Federal Deposit Insurance Corp. hopes to sell the banks, which were seized Friday, by the end of January.

Prefers Loss-sharing

FDIC spokesman Alan Whitney said the agency prefers "loss-sharing" deals, wherein the acquirer of a failed bank agrees to absorb a portion of any future losses on assumed loans.

He said the agency would consider bids for all or some of the 20 failed First City banks, and analysts said it was far from clear that one bidder would emerge with the entire package.

The names of a dozen potential bidders have surfaced, although several said they won't know just how interested they might be until the FDIC releases its bid package.

Likely Contenders

Among the apparent top contenders are the superregionals that already operate in Texas: Banc One Corp., Columbus, Ohio; BankAmerica Corp., San Francisco; Chemical Banking Corp., New York; First Interstate Bancorp, Los Angeles; and NationsBank Corp., Charlotte, N.C.

Also said to be potentially interested in all or parts of First City are: Boatmen's Bancshares, St. Louis; Comerica Inc., Detroit; First Bank System Inc., Minneapolis; First Union Corp., Charlotte, N.C.; MacAndrews & Forbes Holdings, New York; Norwest Corp., Minneapolis; and Society Corp., Cleveland.

Experts believe the five companies already operating in Texas have the advantage in bidding because each to varying degrees could realize cost savings by combining redundant First City operations.

Most Likely

The front runners in the early going apparently are Chemical and First Interstate. Both have expressed interest in First City, and both already have Texas operations headquartered in First City's hometown of Houston.

NationsBank could have difficulty landing First City operations because it already has the largest share of the Texas market. And Banc One expended quite a bit of its takeover fire-power in other deals this year.

BankAmerica is new to the market and might have trouble simultaneously absorbing First City, Sunbelt Savings, and First Gibraltar Bank.

First Union is thought by some to be a strong contender by virtue of its previous ardor in pursuing First City.

A Full Plate?

The company came close to reaching a federally assisted purchase agreement with the FDIC in late summer; the deal was approved by the staff but vetoed by the agency's board of directors.

Since then, however, First Union has agreed to buy Dominion Bancshares Inc., Richmond, Va. Also, First Union is expected to bid on First American Bancshares in Washington, D.C. With these deals in the works, First Union may have trouble reviving a First City bid.

A number of additional bidders have ties to Texas and are well-equipped to pursue First City, experts say.

The highly acquisitive Society Corp. already owns a substantial trust operation in Texas, which was acquired from MCorp by Ameritrust Corp. before its merger with Society.

Detroit-based Comerica Inc. will control more than $2 billion of Texas banking assets after completing the acquisition of operations being surrendered by troubled Hibernia Corp., New Orleans.

Others Have Capability

Financier Ronald Perelman, who recently agreed to sell First Gibraltar to BankAmerica, reportedly has been in steady pursuit of First City for at least six months.

Boatmen's Bancshares is in the process of buying Sunwest Financial Services Inc., Albuquerque, and reportedly looked at First City's West Texas banks when First City was trying to spin them off. It is not clear whether the Boatmen's interest would extend to the entire First City operation.

Other companies seen as eminently capable of a Texas takeover are First Bank System and Norwest Corp., both of Minneapolis. The two concerns already have made successful forays into Colorado.

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