Glendale Federal Bank and California Federal Bank will have to work hard to explain their merger to small-business customers, competing California bankers said.

Glendale is known for aggressive advertisements that attacked Wells Fargo following its 1996 merger with First Interstate Bancorp. The ads asserted that the combined entity would be too big and impersonal, adversely affecting both small-business and personal accounts.

Now that Glendale has to make its own merger work, "it's going to be a delicate situation," said Donald Hance, vice president and manager of small-business banking at Union Bank of California.

One of Glendale's print ads portrayed a banker with "Wells Fargo" emblazoned on his shoe trampling on small-business owners, while another banker said, "Watch your step, you don't want to get any on your shoes."

Terry D. Hess, Glendale executive vice president and director of business banking, said the thrift will continue to promote its customer service and disparage the larger institutions.

"We will not revert to a Wells Fargo-type approach of treating the customers as part of a large system," he said. "We'll continue to have the advantage of a large bank's product mix and a smaller bank's personal attention."

Michael R. James, Wells Fargo's executive vice president and manager of small-business banking, declined to respond to Glendale's ads or comments about customer service.

"We continue to grow fairly rapidly," Mr. James said. San Francisco- based Wells is the second-largest bank lender to small businesses nationwide, with $4.6 billion outstanding, according to Sheshunoff Information Services. NationsBank Corp. is No. 1 with $7.1 billion outstanding.

Mr. Hess said Glendale branch managers and business bankers plan to call more than 5,000 business owners in the next week to tell them the merger will not affect service levels.

Glendale announced Monday it would spend more than $150,000 to sponsor a 12-week training program for 600 small-business owners at Small Business Development Centers in California. The thrift will also waive checking account and loan application fees for small-business owners who participate in the classes.

Small businesses often report problems after a bank merger. According to a 1997 survey by the National Federation of Independent Businesses, 17% of the business owners whose banks merged switched banks as a result. Only 7% of the entrepreneurs said the merger had a positive impact on their business.

"When customers hear about a merger, there is high anxiety that things are not going to be the same, fees are going to increase, and service will decline," said Larry Ridge, vice president for CPS Direct Inc., a marketing firm that advises banks on handling mergers.

California bankers said fewer businesses would be affected by the Glendale-CalFed combination, because of those institutions' thrift heritage, than were by the Wells deal. Glendale began marketing small- business products two years ago, and CalFed began offering Small Business Administration loans last May.

"They haven't been market leaders," said Han Park, senior vice president of Wilshire State Bank, Los Angeles, which has $123 million of assets.

But Frank Mercardante, president and chief executive officer of Business Bank of California, a $102 million-asset bank in San Bernardino, said the thrifts have an image challenge.

"If they in any way give the impression that they have become like the big banks they have been fighting against, they will have problems," he said.

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