Banks seldom lose institutional clients when they merge. When it does happen, departures of investors are usually because of a change in the core strategy of the successor banking company or to following defecting portfolio managers.

But now, politics may be playing a role in investors' decision-making process. In a letter last month to Edward Crutchfield Jr., the chairman of First Union Corp., a state senator in New Jersey pointed out that the state's pension fund has $50 billion in custody with First Union Corp. and owns $150 million of the Charlotte, N.C.-based bank's stock as attention getters.

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