DATE: Tuesday, July 1, 1997                 TAG: 9707010420

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY ANDREW FRASER, ASSOCIATED PRESS 

DATELINE: NEW YORK                          LENGTH:   42 lines

NATIONSBANK CORP. SAID IT WILL BUY MONTGOMERY

NationsBank Corp. said it will buy Montgomery Securities for $1.2 billion, joining big commercial banks eager to ride Wall Street's raging bull by building up strong investment banking franchises.

The deal, announced Monday after about a week of rumors, will allow NationsBank to achieve its aspirations of becoming a major player in the investment banking arena by giving it a formidable stock underwriting and research operation.

NationsBank, based in Charlotte, N.C., is known primarily as a retail bank. It began underwriting bonds for corporations and government agencies about three years ago and also is an adviser to companies on mergers and acquisitions.

``This is the last arrow in our quiver that we need to have for one-stop financing,'' said James Hance, Jr., NationsBank vice chairman and chief financial officer.

The deal gives San Francisco-based Montgomery Securities a partner who could provide it with significant money and opportunities to expand, especially in debt financing. NationsBank has a market capitalization of nearly $50 billion and a significant customer base.

Like many of its competitors, NationsBank wanted to grow its investment banking business by branching out into stock underwritings and by becoming a major financial adviser to corporations, two areas that have been cash-cows with the explosive growth on Wall Street in recent years.

But the question for executives at the company was whether to grow the business internally or by acquiring a partner with those strengths. They decided to do the latter to avoid missing out on an anticipated rash of business and to stay in competition with their acquisition-oriented competition.

In the last two months, BankAmerica Corp. has said it would buy Robertson, Stephens & Co.; Swiss Bank Corp. agreed to buy Dillon Read & Co.; and Bankers Trust New York Corp. purchased Alex Brown & Sons Inc., the nation's oldest brokerage firm.

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