In the mammoth California banking market, San Francisco-based Union Bank seems a weakling despite its considerable size. Its $16 billion of assets are dwarfed by those of its powerful rivals, BankAmerica Corp. and Wells Fargo & Co.

But any competitor that tries to kick sand in Union's face will have to answer to Richard C. Hartnack, a 47-year-old ex-Marine who dropped bombs from the back seat of an F-4 jet during the Vietnam War.

As vice chairman of Union, the largest Japanese-controlled bank in the United States, Mr: Hartnack uses guerrilla tactics to harry the competition.

More than Enough Size'

His arsenal includes supermarket branching, Sunday hours, and heavy promotion of debit cards. His bank is even making a play for check-cashing business in low-income neighborhoods.

"We have more than enough size to compete in California," insists Union's feisty retail chief

Still, Mr. Hartnack is definitely an underdog.

Union, which is 71% owned by the Bank of Tokyo, is the Golden State's fourth largest bank. But Mr. Hartnack admits most consumers in San Francisco and Los Angeles scarcely know it exists. With just a 5% share of commercial bank deposits, Union trails far behind the market leaders.

Dwarfed by B of A, Wells

The bank's 209 branches are spread thinly over vast stretches, giving it a strong presence only in a few scattered locations, such as San Diego.

Union greatly expanded its territory when it bought 33 former Security Pacific Corp. branches from BankAmerica last year. But its retail offices still amount to less than one-third of Wells' total branches and about one-fifth of BankAmerica's.

"Without market concentration, they have a tough time," said San Francisco bank consultant K. Shelly Porges.

All the same, Mr. Hartnack contends he has advantages.

He is convinced that the sheer bulk of California's two banking giants leaves them a musclebound.

And he argues that their top-down management and marketing approaches make them vulnerable to a nimble challenger that can move quickly.

In a recent interview, Mr. Hartnack summarized his formula for building market share: Offer customers the advantages of a big bank -- such as 24-hour telephone banking -- and the exceptional service of a community bank.

To accomplish that, he is pushing a decentralized banking strategy that gives branch managers wide-ranging authority and sales responsibility.

In essence, he is turning Union's branches into miniature community banks. His vision, he explained, is to sell Union as California's largest independent bank -- not as its smallest statewide bank.

"I tell my branch managers: You've got to act like a bank president," Mr. Hartnack stressed. "You've got to be the absolute master of your market."

In Sharp Contrast

That retail model contrasts sharply with those of his two major rivals.

Wells has downgraded the role of branch managers and is managing its sales force from headquarters.

BankAmerica operates its network the way McDonald's runs its burger franchise -- emphasizing efficient distribution through hundreds of locations instead of personal service.

Union's approach promises to differentiate it from its big rivals. But it is far from easy for a bank of Union's size to maintain service levels comparable with those at true community banks.

"Implementing Union's strategy is a challenge," said Lehman Brothers analyst James Rosenberg.

The statewide bank whose strategy most resembles Union's is First Interstate Bancorp's California unit, the state's third-ranking bank.

Mr. Hartnack said it makes sense that the two banks would compete on service since neither can match BankAmerica or Wells in advertising or location.

Union's success hinges on recruiting and training high-quality branch managers, Mr. Hartneck said.

Former colleagues note that his views reflect his experience at First Chicago Corp., where he served as head of retail banking before jumping to Union two years ago.

In Illinois, then a unit banking state, First Chicago assembled its retail network by buying a series of independent banks. The presidents of those institutions stayed on as managers.

I found the guys running those banks were very good," Mr. Hartnack said.

Banking is in Mr. Hartnack's bloodline. His father, Carl E. Hartnack, served for many years as president of Los Angeles-based Security Pacific.

Colleagues say the younger Mr. Hartnack is a confident and inspirational leader.

"He makes decisions quickly -- there's a real pace to everything Rick does," said Charles W. Shoemaker, who reported to Mr. Hartnack at First Chicago.

That action-oriented style has found a home at Union, whose retail strategy s rapidly evolving.

The bank took its current shape in 1988 when Bank of Tokyo's consumer-oriented California First Bank bought Los Angeles-based Union Bank, one of the state's premier commercial lenders.

Union has successfully balanced its retail and commercial businesses during California's economic slump.

While commercial real estate produced major losses, consumer banking has helped keep Union profitable throughout the recession.

Following the 1988 merger, James R. Gibson, Mr. Hartnack's predecessor as retail manager, turned to what were then unconventional methods, such as supermarket banking and Sunday hours.

Sunday Service |Clearly Valued'

Mr. Hartnack has built on that foundation. He has built Union's network of branches in Ralphs Supermarkets to 23. He has extended Sunday hours from the supermarkets to six regular branches in Southern California, with plans for more.

Sunday service "is something clearly valued and understood by consumers," he explained. "It provides us with a distinctive difference."

On pricing, Union's interest rates are about the same as those of its major rivals. But Mr. Hartnack is making it easier for consumers to get free checking accounts. He's also planning one of the first major debit card promotions in California.

At the same time, Union's retail chief is making a strong bid for California's low-income market. Mr. Hartnack estimated that Union may ultimately be able to generate about 5% of its income from low-income customers.

As an experiment, the bank has opened a branch in a low-income community near Los Angeles. Competing directly with local check-cashing stores, the office has an area set aside for handling checks of customers who have no bank accounts.

At 1% Union's check-cashing fee is lower than the specialty stores'. At the same time, the bank encourages customers to open regular accounts at the branch.

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