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Ambivalence, Skepticism Expressed

Some depositors say they don't expect fees to drop; others say better service is possible.


News that the state's largest bank plans to merge with an East Coast financial institution few Californians had ever heard of sparked mixed reaction Monday among consumer watchdogs and BankAmerica customers across Southern California.

While many customers were ambivalent to the announcement that BankAmerica and Charlotte, N.C.-based NationsBank want to combine, others worried aloud that the proposed new "superbank" would ultimately mean poorer service, higher fees and less competition in an industry in the throes of consolidation.

"I think big banks have become too powerful," said Bank of America customer Lynnore Dagg of Glendale after emerging from the lunch-rush bustle at her branch in downtown Burbank. "This is ridiculous."

But fellow Glendale resident Hovik Arakelian, a 10-year BofA customer, said he saw service improve after the San Francisco-based bank acquired Security Pacific Bank in 1993, and he hopes this latest merger will usher in more of the same.

"I heard a little about it on the radio, and they say it's going to be better for us," Arakelian said.

Indeed, NationsBank Chairman Hugh McColl, who will become chairman and CEO of the new company, predicted that service fees will drop as the new bank's economies of scale reduce costs. "People can do business across geographic lines and always be in reach of their bank," he said. "It's very, very convenient for everybody."

Consumer watchdogs, however, are skeptical.

"Bigger banks always mean increased fees," said Gail Hillebrand of Consumers Union in San Francisco.

Recent surveys by consumer groups and others have found that more banks are charging additional fees for ATM use, particularly by non-customers. In California, BankAmerica is among those imposing ever-steeper surcharges. Meanwhile, NationsBank has been charging some of the highest fees in the East.

What's more, consumer groups worry that decisions about banking policy, especially lending to low-income communities in California, will be made in North Carolina.

"No one sitting in an office in Charlotte, North Carolina, can understand the credit needs of California's diverse communities," said Alan Fisher, executive director of the California Reinvestment Committee, which is working with financial institutions, including BankAmerica, to increase lending in economically depressed and minority communities.

BankAmerica spokesman Cary Walker said both banks have long track records of lending to poor communities and will continue that practice once the merger is finalized.

"By creating a truly nationwide bank, this merger will only strengthen our collective abilities to meet the needs of low-income communities," Walker said. "Both banks have been very innovative and have really demonstrated that inner-city lending can be profitable. You don't stop doing something that you have learned to do profitably."

Still, despite these pledges, some customers suggested that the proposed merger deal probably has more to do with the well-being of the two banks.

"I'm sure this will benefit the banks, but I'm not sure what benefits customers will have," said Marcela Martinez, a 28-year-old Huntington Park resident after making an ATM withdrawal at a Pacific Avenue branch. "I'm just worried they'll raise the service charges."

Martinez said she has chafed under B of A's service fee hikes in the past but said she has been satisfied with the bank's service overall. "I might look around for another bank," she said. "But they all charge fees; it might not be worth it." The branch is only a few blocks from her house, and she has no car. "What's another dollar every month," she said.

Waiting to use the same ATM as Martinez, hospital worker Jose Loya, 40, took news of the merger in stride. "I'm not worried about it too much," the 8-year BofA customer said. "I think if they're going to unify, they're doing it for their own good. But who knows, they might offer better service."

Lori Conti, 26, of Fountain Valley said the new bank could go a long way in winning consumer confidence if it eliminated the fees BofA currently charges her to conduct transactions with tellers and at non-BankAmerica ATMs.

"I'm totally skeptical about it," she said outside her branch along a busy Costa Mesa commercial strip. "The banking industry is here to make money."


Times staff writers Susan Abram, Debora Vrana and correspondent Leslie Earnest contributed to this report.

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