Indiana's capital city was supposed to suffer, bearing the brunt of the cost cuttingassociated with the planned merger of Banc One Corp. and First Chicago NBD Corp.

But after months of negotiations between bank and city officials, the local impact of the deal to be closed later this year may be considerably softened.

Job losses are to be offset by credit card jobs to be added later. No significant downtown office space is to be left vacant. Branches that must be sold will go to a bank that promises civic commitments.

The apparently happy ending did not result from Banc One's voluntarily coming to the city's aid. It took some arm-twisting by Mayor Stephen Goldsmith, a lawyer who began preparing his case the day after the merger announcement.

The mayor hired Ronald R. Glancz, a respected bank regulatory lawyer in Washington. Mr. Goldsmith met with Federal Reserve officials and talked with Department of Justice officials before calling for meetings with the chief executive officers of Banc One and First Chicago.

"We were probably better versed and represented than any other city," the mayor said.

With the two largest banking companies in town planning to merge, the mayor seized on the probable reduction in competition and used that as leverage to get commitments from Banc One on jobs and office space.

In exchange for the promises, Mr. Goldsmith said he would support the merger.

"To me the issue wasn't one of size, it was one of competition," Mr. Goldsmith said. "That had an anticompetitive effect on the market."

Mr. Goldsmith, a Republican, had reservations about the deal. He wanted to amass as much firepower as he could before holding "serious but not hostile" negotiations with CEOs John B. McCoy of Banc One and Verne G. Istock of First Chicago.

The mayor said he wanted to minimize disruptions in his city and to continue the merging companies' civic commitments and extend them to whatever bank would buy divested deposits.

Banc One and First Chicago are equity investors in Indianapolis' downtown mall, contributors to construction of a downtown basketball arena, and benefactors of some of the city's biggest charities.

Mr. Goldsmith, the Republican nominee for Indiana governor two years ago, has presided over a revitalization of downtown. The last thing he needs is a major blow to the local economy.

"Steve has rising political ambitions," said Owen B. Melton Jr., president and CEO of First Indiana Corp. "If he presides over Indianapolis' demise, his aspirations are dead."

Mr. Melton, a Democrat, said he believes the mayor's negotiations on the Banc One deal were effective. "He put pressure on them early," he said.

Mr. Goldsmith said, "There was an assumption here that if we deal with each other in good faith we would be supportive."

He spoke for the merger at a Fed hearing in Chicago last month. A few days afterward, Banc One said it would add 750 credit card jobs in Indianapolis to offset merger-related layoffs.

The two companies employ 6,000 people in Indianapolis, and Mr. Goldsmith is saying that in the end there will be no net job loss.

In addition to negotiating with Banc One, Mr. Goldsmith took the unusual step of meeting with the likely buyer of $850 million of Indianapolis deposits the merger partners are expected to divest.

This banking company-widely assumed to be Union Planters Corp. of Memphis, though it has not been officially confirmed-has agreed to occupy most of the building NBD Indiana is currently using, to retain all workers, and to commit itself to civic causes.

For Banc One, First Chicago, and Union Planters, such promises have become par for the course.

"Banks know part of the calculus is to take into account civic and community needs," said Mr. Glancz, the regulatory lawyer.

Mr. Goldsmith, still not a big fan of the merger, said, "It's the best we could have expected under the circumstances."

"I'm involved in mitigating the damage," he added. "All the areas we wanted addressed were addressed. It would be too much to say I got everything I wanted."

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