The ascension of Kenneth D. Lewis to the No. 2 post at NationsBank Corp. is seen by analysts as an affirmation of the Charlotte, N.C.-based bank's emphasis on expense controls.

Mr. Lewis, 46, who was appointed president last Thursday, had been considered the heir apparent to chairman and chief executive Hugh L. McColl Jr., 58.

Mr. Lewis had been president of NationsBank's retail division, its largest unit, until his promotion.

The promotion of Mr. Lewis "sends an important signal [to investors] that NationsBank is going to take a harder line on the expense side of the equation," said Judah S. Kraushaar, with Merrill Lynch Capital Markets.

Demanding Manager

Within the company, Mr. Lewis is viewed as a demanding, efficient manager, though there is some question about whether he has the strategic vision of Mr. McColl, who has expanded NationsBank's assets 12-fold since he became CEO in 1983.

In any case, Mr. Lewis may have to wait up to seven years to take command, since there are few signs that Mr. McColl will retire early. Mr. McColl declined to be interviewed on the question, but issued a public statement last Thursday saying it would be "a long time until I must retire."

"I see it as an announcement to let people know, those involved in the bank as well as people outside the bank, where things stand," said Richard I. Stillinger, an analyst with Keefe, Bruyette & Woods Inc. in New York.

Mr. Lewis' promotion puts him back into NationsBank's center of power, the corporate headquarters in Charlotte. He worked there earlier for NCNB Corp., before it merged with C&S/Sovran Corp. creating NationsBank.

Most recently, Mr. Lewis ran NationsBank's retail division, called the General Bank, from Atlanta.

In January, he will move back to Charlotte, where he will retain control over NationsBank's far-flung branch system, but also be given additional responsibilities for the trust and private banking divisions.

Based on Mr. Lewis' three-year stewardship of the General Bank, as well as his performance in past assignments, analysts do not view his most recent promotion as a signal of any radical changes.

"Ken Lewis is very well schooled in the ways of that company," said Nancy Bush of with Brown Brothers Harriman & Co.

Analysts cite NationsBank's recent quarterly earnings as an indicator of Mr. Lewis' ability to generate loans and cut costs. The nation's third-largest bank showed better loan growth than most of its peers, in recent quarters.

Much of that loan volume has come out of the branches, which are under Mr. Lewis.

There are also signs that NationsBank as a whole is doing better at cutting costs. The overhead ratio fell 160 basis points to 61.5% in the third quarter.

Since most of NationsBank's expenses are generated by the branch system, which is undergoing a massive systems upgrade, that improvement is also credited to Mr. Lewis.

He has enjoyed a wide range of responsibilities since he joined NationsBank's predecessor company, NCNB Corp., as a credit analyst in 1969.

At various times he ran the bank's Florida and Texas subsidiaries, managed its international operations, and led the middle-market lending group.

Other Promotions

In other promotions announced last Thursday, NationsBank said chief financial officer James H. Hance Jr. and James W. Thompson, chairman of its eastern division, had been named vice chairmen of the holding company. Mr. Hance also was given control over several nonbank subsidiaries.

Frederic J. Figge, chairman of credit policy, was given the additional title of chairman of corporate risk policy, which puts credit policy in the company's international operations under his supervision.

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