The Clinton administration's decision to back expanded powers for banks could bolster their stocks this year, particularly if it let banks become more active in insurance.

"It would be an enhancement across the board, from the smallest to the largest banks," if insurance lines of business were allowed, said veteran industry analyst John J. Mason of Interstate-Johnson Lane, Atlanta.

Another industry analyst, Raphael Soifer of Brown Brothers Harriman & Co., New York, agreed that insurance powers would be an important plus for the industry, but also cautioned that "the track record for 'financial supermarkets' has been mixed."

Among the major banks that may be best positioned to benefit from the changes are Citicorp, BankAmerica Corp., Norwest Corp., and NationsBank Corp.

Treasury Secretary Robert E. Rubin unveiled the administration's position in a speech Monday in New York and will lay out further details tomorrow in Washington during testimony to Congress.

He will urge repeal of the longtime legal barriers that have separated commercial banks from both the insurance and securities brokerage industries.

The wall between banks and securities firms has steadily been weakened in recent years with the active consent of bank regulators. Repeal of the Glass-Steagall Act is now viewed by most observers as inevitable.

But the issue of banks selling insurance, now prohibited by the Bank Holding Company Act, is far less settled. Thus, the support of President Clinton for change is an important new factor for investors in bank stocks to assess.

"I would like to see the banking franchise broadened," Mr. Mason said, "especially after having been whittled away at over the years by the likes of the commercial paper market and the automobile manufacturers becoming credit card issuers."

"And it is quite refreshing to see someone advocating that for a change rather than knocking the banks' brains out," he said of Mr. Rubin's statement on Monday.

Simple insurance products related to investment and retirement are an excellent vehicle for franchise enlargement, he said.

The banks already have a huge infrastructure for handling such products and are specialists at processing them, he noted.

While emphasizing he is not a specialist in the insurance industry, Mr. Mason said he suspected it has not gone through the tough regimen of improving efficiency that the banking industry has over the past dozen years.

"The banks are ferociously efficient at processing these days," he noted. "There have been enormous technological advances in this field and the banks have spent a lot of money on them."

Mr. Soifer said he had long expected the United States to eventually follow the European practice of allowing banks to combine forces with insurance and securities brokerage entities.

"The U.S. banks have really been at a major competitive disadvantage globally on this," he said Monday.

But he also noted that American consumers have tended to disdain the concept of financial supermarkets and buy financial services from specialized providers.

"Banks would clearly like to be able to offer life insurance products such as guaranteed investment contracts and variable annuities, and generally to be fully competitive with the securities and insurance companies in offering retirement products and investment vehicles," he said.

"If these changes happen, and the price of them turns out not to be too high, I would expect some banks to choose to go into business selling life insurance, but less so property and casualty insurance," he said.

In the United Kingdom, he noted, it has been the pattern for banks to own life insurance underwriters, but to act as property-casual insurance agents while leaving this specialized underwriting to others.

"Underwriting property-casualty risks is very different from banking and investments," he pointed out.

For British banks generally, and for Lloyds Bank especially, he said, life insurance activities have been reasonably profitable.

But, with a few exceptions, banks have already moved as far into the securities business as they likely want to, he said. New York's J.P. Morgan & Co. has been the most active.

That may well be for the best, he said. "The securities industry has a lot of overcapacity and the one thing it really doesn't need right now is more capital being invested in it."

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