Consolidation in the banking industry is speeding toward its final phase-a wave of deals that could create a few dominant national companies, according to the head of Goldman, Sachs & Co.'s bank merger practice.

This final rush of major mergers among the industry giants probably will be over within two to four years, Christopher J. Flowers, a partner in the Wall Street firm, said Tuesday. After that, he said, merger activity is likely to slow to a trickle of smaller deals to solidify banks' positions in regional markets.

At a forum in New York on mergers and acquisitions sponsored by American Banker and the Strategic Research Institute, Mr. Flowers and other speakers said dealmaking will be hastened by high stock prices and a strong economy.

"A market as robust as this generally encourages mergers," Mr. Flowers said.

What's more, "there's still plenty of money on the table" for acquirers, said James J. McDermott Jr., president of Keefe, Bruyette & Woods Inc. He estimated $52.3 billion of potential merger-related cost savings are there for the taking at the 91 banks with assets of $2 billion to $25 billion.

Mr. Flowers said the four times book value that NationsBank Corp. recently agreed to pay for Barnett Banks Inc. can be expected to encourage dealmaking. "With prices so astounding," he said, "parties will think harder about selling."

From his vantage as a merger adviser, however, Mr. Flowers said the end of major mergers is in sight, simply because there are fewer major players left. Still, he added, "nobody's even close to having national coverage."

Chase Manhattan Corp. is the closest, he said, noting that 36% of the nation's population lives in states where the New York bank has branches. But he listed four hypothetical deals that would let a single company reach states with a majority of the U.S. population: A merged Chase-First Union Corp. would service states with 71% of the population; Citicorp-Chase would reach 69%; and Citicorp-First Union or NationsBank-Chase would reach 68%.

But only two companies will ever become truly national, Mr. Flowers said: the two that wind up buying the only major banks in California, Wells Fargo & Co. and BankAmerica Corp.

Mr. Flowers said there is little interest among banks to enter California by acquiring one of the major thrifts there. "They're in a different business,"' Mr. Flowers said. "In general, thrifts are attractive for in-market consolidation. They're not attractive as an entry vehicle."

Speakers said acquisitions of specialized firms, whose products can be marketed more efficiently by banks, are likely to continue.

William P. Boardman, the senior executive vice president in charge of acquisitions for Banc One Corp., said Fleet Financial Group's deal to buy Quick & Reilly, the nation's third-largest discount brokerage, and his own company's purchase of credit card specialist First U.S.A. Inc. exemplify that strategy.

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