The integration of European financial markets will speed up the consolidation of European banks and lead many to expand their U.S. operations, according to senior executives.

U.S. and European bankers attending a meeting of the Washington-based Bankers Association for Foreign Trade this week said that the cost of technology investments, combined with intense competition, will put further pressure on European banks to merge, cut expenses, and specialize to survive.

They added that it may also prompt some big European banks to expand into the United States and emerging markets to increase revenues and profits.

"We see a continuing transformation that will lead many banks to allocate more capital to the United States and to emerging markets," said Kurt F. Viermetz, vice chairman at J.P. Morgan & Co.

Mr. Viermetz also predicted that consolidation will speed up among local and regional banks before increasing Europe-wide.

The European Community is scheduled to merge members' currencies into a single unit, the euro, by Jan. 1, 1999.

The currency merger will eliminate much of the corresponding banking and clearing businesses, as well as foreign exchange trading, which many European banks rely on for profits.

It will also have an impact on several U.S. banks, including Citicorp, Chase Manhattan Corp., and Bank of New York Corp. Citicorp runs a pan- European retail and corporate banking network, while Chase and Bank of New York have large processing and securities custody operations that will have to shift to a single currency.

"A banker relishing the prospect" of the European monetary unit "is like a goose relishing the prospect of Christmas," said Jaap J. Kamp, senior executive and vice president at Amsterdam-based ABN Amro Bank.

Many European banks have a strong but eroding presence in European markets, Mr. Viermetz said. "The forces of a single market will make many banks uncompetitive or plain unprofitable."

Bankers caution that different regulations, tax, and accounting systems will influence the pace of consolidation. They also predicted that some banks may opt to expand outside the European Community, rather than inside, and to expand in nonbanking sectors, such as insurance.

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