The six CEOs who banded together to form a splinter lobbying group this year have a sobering message for the industry's trade associations: We'll be back.

True, the rebels didn't get very far in their push for interstate branching. And they acknowledge that their single-minded pursuit of such legislation irks some segments of the industry.

But the executives have seized on branching as the top legislative priority for their super-regional banks. And they remain angry at what they see as the ineffectiveness of groups like the American Bankers Association in promoting that agenda.

So, undaunted by their lack of success this year, the banks plan to press ahead in the next session of Congress. "This is not the end of the lobbying effort," says Mark Leggett, the head of political relations at Nations-Bank Corp., a prime mover of the coalition. "The issue is still there."

That decision is certain to frustrate the five main trade associations, which would prefer that all lobbying be left to them.

"I think it is always better if the industry can speak with one voice, particularly with the interstate banking issue," says Donald G. Ogilvie, executive vice president of the ABA.

Maybe so, but the formation of the splinter group underscores

scores the fundamental dilemma that the ABA faces: how to reach consensus lobbying positions for a diverse membership without angering some segments.

Indeed, the coalition provides vivid proof that when the interests of individual banks diverge, industry harmony can promptly go by the wayside.

"We have critics who say we're adding to industry division," says Julius L. Loeser, senior vice president for government affairs at coalition member First Interstate Bancorp. "But what are we supposed to do: Sit back, pay our dues, and not get what we want?"

That's not to say that the six banks - known as the Coalition for Interstate Banking and Branching - think they have enough muscle alone to force through such legislation. But they're determined to push the issue to the forefront - and cut deals if necessary to get their way.

NationsBank, which is based in North Carolina, is regarded as the leader of the splinter group, mainly because chief executive Hugh McColl has been so outspoken about the need for banks to branch freely across state lines. (For more on NationsBank's views, see the story on page 22).

The other CEOs in the group, which is sometimes referred to as the "Gang of Six," are Richard Rosenberg of Bank America Corp. in San Francisco, Edward Carson of FIrst Interstate in Los Angeles, Terrene Murray of Fleet Financial Group in Providence, R.I., Lloyd Johnson of Norwest Corp. in Minneapolis, and Thomas O'Brien of PNC Financial Corp. in Pittsburgh.

The companies have something in common: large-scale interstate banking operations and a desire to expand further. But current law requires them to operate separately chartered banks in each state, rather than branches of the lead bank, hindering efficiency.

Although Congress adjourned this month without enacting a branching bill, the coalition did reach a compromise with the legislation's main opponent - insurance agents.

The coalition agreed to support a measure that would roll back some existing bank insurance powers in return for the insurance industry's support of branching.

But the group still faces formidable obstacles.

For one thing, the ABA is against the deal. "I don't see any reason we should link interstate to rollbacks in insurance," says Mr. Ogilvie.

What's more, the politically powerful Independent Bankers Association of America, which represents community banks, remains opposed to unrestricted branching by big banks. Recent attempts by the coalition to win over the IBAA fizzled.

Still, the regionals' determination to push ahead reflects their degree of dissatisfaction with the effectiveness of broad-based associations.

"There are too many trade groups, and the big banks are not being represented well," says one senior executive at a coalition member.

"There is a disequilibrium between lobbying for small banks and big banks," he says. "The smaller banks are much more effectively organized and represented."

First Interstate's Mr. Loeser also contends that the interests of smaller banks carry undue influence at the ABA.

For its part, the ABA was stung by the splinter group's charges that it isn't representing them effectively - as well as by Mr. McColl's threat to pull NationsBank out of organizations that didn't press hard enough for branching.

Mr. Ogilvie maintains that the industry's best route is to present a unified front to Congress, even if that means compromises among members.

And the group does face a balancing act - small, midsize, and large banks each get six seats on the ABA's board, giving each group an equal say in policymaking.

Even before the branching coalition was formed, though, the ABA had perceived a need to pay more attention to larger banks. It had started to set up its own group to target the interests of regional banks.

"It's an attempt to bring the CEOs of the larger banks into more active participation in the ABA," says William M. Isaac, managing director of the Secura Group and an adviser to the council. "It should make the ABA much more effective."

The council officially got off the ground last month with a meeting of 30 chief executives. The 200 biggest banks will be invited to the council's next meeting, early next year, says Mr. Ogilvie.

In a further effort at harmony, members of the ABA and the Association of Bank Holding Companies - in an unprecedented act - sat down together a few weeks ago to identify common lobbying ground.

"What we've had is a disconsolate voice from banking, and we're trying to repair that," says Lud Ashley, president of the holding companies group.

How much did the coalition's threatened return have to do with his association's talks with the ABA? "Zero," says Mr. Ashley. "That's not a factor."

Trade group representatives maintain that, perhaps with some modifications, their associations remain the best hope for lobbying.

Mr. Isaac says the ABA's council for regional banks is likely to reduce demand for splinter groups. And Mr. Ashley insists that efforts such as the branching coalition are doomed to fail because the administration and Congress listen to the established trade groups.

But Mr. Ashley does foresee fewer trade groups on the horizon. A merger between his group and the Association of Reserve City Bankers has been kicked around for years, and Mr. Ashley predicts the deal will be done early next year.

Coalition-Building Route

A dissenting view comes from the IBAA's executive vice president, Kenneth A. Guenther, a fierce rival of the ABA who thinks broad-based industry groups have their work cut out. "The future will not see banking speaking with one voice," he says. "the umbrella trade association promoting |unity' is going to have a tougher time of it."

In Mr. Guenther's view, successful lobbying will have to be based on coalition-building, and not just with banking groups.

"Given the [small] number of votes that banking controls even in the best of times . . . you have to go outside" the industry, he explains.

Mr. Guenther notes that his group reached out to the senior citizen lobby - the American Association of Retired Persons - in 1991 to kill provisions in the administration's broad banking reform bill that would have cut back deposit insurance.

"We wouldn't have won that battle without AARP," says Mr. Guenther. "Who wins will be who can put together the best coalitions."

Can't Do It Alone

The coalition members acknowledge that they alone cannot broker major legislation like a branching law. They will ultimately need the support or at least the neurality of ABA to seal any deal.

"Six banks should not want to set industry policy; six banks can't," says William N. Kelly, Norwest's vice president of government relations. "We recognize that we are part of a larger universe," he says.

"You can't go it alone," agrees NationsBank's Mr. Leggett. "If the industry is against it, if the trade associations are against it, the coalition can't succeed."

The superregional's game plan is to push the issue hard, searching for compromises acceptable to the trade groups.

With that in mind, the coalition plans to resume talks with the IBAA; Mr. Guenther says he is open.

The coalition's carrot: Support for an exemption in a branching law for towns of 50,000 or less. Under such a compromise, banks wishing to branch into these small towns would have to acquire existing branches.

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