The merger wave is reshaping the ranks of the biggest U.S. banking companies.

Yearend 1995 asset-size compilations by the American Banker reveal that 10 institutions among the top 25 would be in higher positions after completing pending mergers. Two others on the list have deals pending that would not change their standing. (Tables are on page 4.)

While the most noticeable change is at the very top - where the combination of No. 5 Chemical Banking Corp. and No. 8 Chase Manhattan Corp. will create a new No. 1 at $304 billion of assets - some equally dramatic rises are in the offing.

Wells Fargo & Co., now No. 17, would be eight places higher with First Interstate Bancorp included. National City Corp., acquiring Integra Financial Corp., would jump seven slots, to No. 17.

CoreStates Financial Corp. would rise nine places, to No. 20. Boatmen's Bancshares and First Bank System would also cross the divide into the Top 25.

Barring a major move, Citicorp, the company that has been No. 1 since overtaking BankAmerica Corp. in the early 1980s, will drop into second place on March 31. That is when the new Chase Manhattan is scheduled to officially be in business.

Also among the top 10, First Union Corp. stands to add about $2.5 billion of assets through three acquisitions, but it would stay at No. 6.

Fleet Financial Group, incorporating Natwest Bancorp, would jump three places, to No. 8. Fleet was 17th at yearend 1994, before adding Shawmut National Corp.

Analysts predict consolidation will continue at a healthy clip for the rest of the decade. They generally view the trend as a long-term plus for the industry, though payrolls will be drastically reduced.

"Productivity ratios will continue to improve, and the profitability of the American banking system will continue to go up," said Robert Albertson, an analyst with Goldman Sachs & Co. "We're getting a much more rationalized structure in the banking system, and that's good for pricing for both banks and consumers."

In the short run, however, bankers will still have to cope with the ups and downs of the economy - and it could get rocky.

After rising steadily since the end of 1994, the average return on assets for the top 25 fell to 1.07% in the fourth quarter from 1.21% in the third. The main reason: a decline in net interest margin to an average 3.93% from 4.04%.

The degree of big-bank concentration is reflected in the combined banking assets of the 25 largest holding companies. This figure has increased over five years to $2.4 trillion, from about $1.5 trillion. With pro forma additions of $170 billion it will comprise almost half of total U.S. banking assets.

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