National City Corp. appears to be the first casualty of the Securities and Exchange Commission's stricter guidelines on merger-related accounting.

The $36.2 billion-asset banking company plans to rescind the remainder of its ambitious share repurchase plan after completing a merger with Integra Financial Corp. in May.

Cleveland-based National City would not comment on the move, which came to light in the merger proxy released last week. But the plan is being terminated as the SEC cracks down on share repurchases by companies involved in mergers that are accounted for as poolings of interest.

"National City is being careful not to jeopardize the pooling treatment for the merger," said Joseph Duwan, a bank analyst with Keefe, Bruyette & Woods Inc. "This is likely what you will be seeing in the future for companies using poolings."

The SEC issued a staff bulletin last week that said companies should wait six months after the close of a merger to begin repurchasing shares. Before the recent SEC guidance, most companies had assumed a three-month wait was appropriate.

The SEC also said that companies should not proceed immediately after deals with share repurchases that were initiated before the merger announcement.

"The staff believes that the intention to resume reacquiring stock pursuant to a pre-existing plan cannot be distinguished from an intention to reacquire stock formulated concurrently with the plan of combination," the SEC said, in a notice dated March 19.

This apparently was critical for National City. The company repurchased 20.6 million common shares in 1994 and 1995, and 278,000 preferred shares.

National City still has 1.5 million common shares left under those authorizations, according to its recent annual report. At the current stock price, the company would have spent $52.5 million to repurchase those shares.

The merger proxy said the bank has suspended the repurchases, and management would request that the board of directors rescind the remainder of the plan.

"Although National City has an active capital management program in the form of dividend increases and substantial stock repurchases, National City has no plans to make tainted share repurchases in connection with its capital management program, given the constraint associated with the pooling of interest method of accounting," the proxy said.

This issue first hit the headlines in January when the SEC disallowed First Bank System Inc.'s planned share repurchase as part of the bank's agreement to buy First Interstate Bancorp.

In that decision, the SEC apparently was concerned that First Bank had announced its intentions to buy back stock after the merger, accounting experts said.

In poolings, companies merge their balance sheet in a tax-free exchange of stock, and without the creation of goodwill, which must be amortized in annual charges.

If a company soon after a merger begins repurchasing shares, this can be viewed as an indirect cash transaction, which could be subject to taxes and creates goodwill.

"Obviously part of the SEC's concern is conduct," said Henry Dickson, an analyst with Smith Barney. The commission does not want companies to be seen as intending to repurchase shares as part of a pooling, he said.

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