To Our Readers:

Slice it. Spice it. Dice it. No matter how you look at it, the first half of 1998 was a spectacular period for mergers and acquisitions in financial services.

By one intriguing measure, 5% of all banks will have disappeared during 1998 (see article, page 4). By another, the value of mergers in the six months was triple that of any other full year.

While the deals have generally brought praise from observers, there have been some voices of dissent. Some of the deals were pulled off so quickly that experts wonder whether the acquirers could have done the appropriate due diligence so swiftly and with such secrecy (see article, page 5).

Some of the other dissent has been wry. The merger wave has triggered a rash of humor on the part of the nation's cartoonists, reflecting the discomfort of the public with the rapid changing of nameplates at their familiar local branches (see article, page 8).

The wave of consolidation, ironically, comes while Congress has been inching ahead with its efforts to reform the banking business. The big institutions have taken the job into their own hands, finding creative and aggressive ways to bypass existing regulations (see article, page 11).

But the consolidation has left some stepchildren. Community banks, hot properties a few years ago, are being largely ignored as acquisition targets in the present market (see article, page 12). As a result, prices being paid in the few recent transactions have fallen sharply.

Outside the United States, the consolidation movement is just getting under way (see article, page 22). But experts believe it will build to a fever pitch in the next few years, rivaling the movement in the United States.

Meanwhile, mergers are continuing apace in the second half. The latest deal, SunTrust Banks' acquisition of Crestar Financial Corp., will create the nation's 10th-largest bank. It will be the fifth-largest bank deal this year.

Sincerely,

Edward Kulkosky

Features editor

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