As NationsBank Corp. prepares to merge with Barnett Banks Inc., upheaval in Barnett's investment and insurance units could be in store, industry watchers say.

Charlotte, N.C.-based NationsBank plans to slice Barnett's expenses in half. That, and the fact that the banks' investment product styles and strategies differ, could mean an overhaul for Barnett's high-profile asset- management group, which includes its investment and insurance operations.

"I suspect a bloodbath of Barnett people," said Burton J. Greenwald, a Philadelphia-based mutual fund consultant.

Representatives of both banks said it's too early to say how the merger would affect their investment product programs. But it's a safe bet that many jobs at Jacksonville, Fla.-based Barnett would be cut. And management would probably to feel the pain along with rank-and-file employees, Mr. Greenwald said.

To be sure, the post-merger bank would be an investment product powerhouse, with some 575 registered representatives and $32 billion in mutual fund assets under management. In 1996 the partners' mutual fund sales totaled $1.7 billion, according to Singer's Annuity and Funds Report.

But the two banks would have to work out significant differences in their investment sales strategies.

NationsBank has fashioned itself as a full-service financial services company eager to take on securities heavyweights like Merrill Lynch & Co. and Smith Barney Inc. Recently it unveiled a no-load mutual fund supermarket to compete directly with industry giant Charles Schwab & Co.

Barnett sells a range of nonproprietary mutual funds but is known for emphasizing its proprietary fund family, the Emerald Funds, and increasing assets under management.

"They have opposing philosophies," said Kenneth Kehrer, a consultant in Princeton, N.J. "They're going to have to choose a style."

The banks' insurance businesses are fairly new. The Barnett name is strongly identified with insurance because the bank was the plaintiff in the Supreme Court case that cleared the way last year for national banks to sell insurance.

The banks sell different insurance products, but that could mean the programs complement each other and might be blended more easily, said Mr. Kehrer.

NationsBank sells mainly term insurance, most of it over the Internet. Barnett focuses on automobile insurance and offers term and universal life.

Still, in takeovers such as this, executives at the acquired banks have generally not fared well.

"The acquirers are usually bigger, usually better, and usually have more political clout," said Joy P. Montgomery, an industry consultant in Morristown, N.J.

NationsBank's investment program is certainly bigger. Its sales force and revenues dwarf Barnett's. A NationsBank spokesman declined to comment on its plans for Barnett's business, but added that many of the merger- related job cuts would be made through attrition.

Barnett executives are certainly not helped by the perception that the dominant bank in Florida has failed to fully tap the rich potential of the state's retiree market to sell its mutual funds and annuities.

Much was expected of Barnett's investment program after the bank opened its wallet in 1995 to lure Richard H. Jones, a former Fidelity Investments executive, to be its asset management chief.

Mr. Jones, in turn, brought the bank other respected executives with Fidelity on their resumes.

But Barnett's program has been dogged by reports that employees are frustrated with management turnover and a lack of structure and direction.

One area where NationsBank would not have to choose whether to let a Barnett executive go is the insurance business. Robert Nellson, the executive in charge of insurance and nonretail deposit products, left this summer for undisclosed reasons. No successor has been named.

Barnett's insurance unit is headed by Robert White, who reports directly to Mr. Jones.

Mr. Nellson's departure is the latest in a series of executive changes that have fueled the impression that all is not well in Barnett's insurance and investment businesses.

Much attention has been focused on Mr. Jones, who many say has not lived up to the bank's expectations. Barnett has vigorously denied rumors that Mr. Jones is on his way out.

But now Mr. Jones would be vying for a spot against a counterpart at a far bigger bank, most likely John Munce, head of NationsBank Investing and Investment Management. A NationsBank veteran, Mr. Munce is well regarded by industry watchers.

"The betting would be against Jones staying on, because they've been acquired." said Mr. Kehrer. "On the other hand, there are lots of examples of people who have been acquired and then survived and been given big positions."

The proprietary funds themselves would probably be consolidated under the NationsBank name, said Geoff Bobroff, a fund consultant in East Greenwich, R.I.

Both fund groups are no-load, which should make for easy assimilation, he added. Observers say that whatever the fallout, the deal has great potential.

"Nations, which has a more aggressive sales culture, can capitalize on the distribution network and client base," said Mr. Greenwald. "Barnett simply never capitalized on that."

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