Following the lead of some other major commercial banks, Marine Midland Banks Inc., once a venerable and major competitor in the New York tax-exempt arena, yesterday announced it was bowing out of the municipal bond business.

The bank, which only 3 1/2 years ago beefed up its municipal securities staff, said -- effective yesterday -- it would close its section 20 subsidiary, Marine Midland Capital Markets Corp., and cease municipal institutional sales, trading, and banking.

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