Before Fleet Financial Group announced in February that would acquire Shawmut National Corp., a number of analysts had been quietly saying that they were unimpressed with the results of a restructuring effort the Rhode Island company began more than a year ago.

Further, it was widely assumed that Fleet was looking to make some kind of a deal - either a merger of equals or selling out to a larger bank. And some have suggested that the now-completed reengineering, called Fleet Focus, was largely undertaken to move closer to that goal.

All of which raises the question: How does the industry regard major cost-cutting initiatives in an era of consolidation?

The answer: It depends. "It is really specific for the region and for the company itself," said Norman Jaffe, an analyst with Fox-Pitt, Kelton in New York. "One would argue that when you are having a downsizing initiative it is because the revenue outlook is such that in order to achieve reasonable returns you are going to have to take some corrective actions" to cut expenses.

Mr. Jaffe noted, for example, that economic growth in New England, the mid-Atlantic states, and parts of California has been slow. And while paring down the expense base may be a key factor in improving the health of the bank, it certainly does not mean the bank is looking to sell out.

"Sometimes you have a number of guys who have grown, like Banc One," he said. "Now Banc One is doing a restructuring. Would you say they're putting themselves up for sale?"

Sandra Flannigan, an analyst with Merrill Lynch in New York, noted that downsizings can also provide banks breathing room to avoid having to link up with another institution.

"To some degree, it is all tied together, because U.S. Bancorp (for example) certainly either has to be able to begin to consistently produce acceptable returns or it is vulnerable," she said. "It is a bank that had not had a consistent track record or high-quality earnings."

Last year, the Portland, Ore.-based bank announced an effort to reduce its efficiency ratio to 59% by the end of 1996.

"Certainly, our sense has been in the case of U.S. Bancorp that the board would give the new senior management some time to execute the new strategy," said Ms. Flannigan.

Ms. Flannigan also offered an example of another bank, First Bank System, that went through a major restructuring and emerged as a stronger player that continues to produce strong growth.

"It's a trend that has many facets to it," said Mr. Jaffe.

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