FLEET <FLT> AIMS TO SPEED MERGER WITH NORSTAR Fleet Financial Group hopes its proposed merger with Norstar Bancorp <NOR>, ranked as the largest U.S. banking merger, can be completed by the beginning of 1988, according to an executive of Fleet. Robert Lougee, director of corporate communications for Rhode Island-based Fleet, told Reuters the company is exploring the possiblity of seeking a change in the national trigger date for the state's reciprocal bank law to Jan 1, 1988 from July one. The decision is up to the Rhode Island legislature. The merger plan was announced in a midday news release that said the deal, worth about 1.3 billion dlrs, would be consummated July one when Rhode Island barriers to interstate banking outside of New England come down. "If we can consummate the deal earlier that would be better for all concerned," Lougee said. He said to the best of his knowledge a change in the Rhode Island law would not be a hardship for any other banking institution in the state. He said Fleet is optimstic Connecticut law, which only permits interstate banking mergers within New England, can be amended. Fleet owns First Connecticut Bancorp. If the Connecticut law is not amended in time, Lougee said, an option would be to spin off that unit with repurchase provisions. The New England reciprocal banking laws have excluded New York as a means of protecting regional banks from being gobbled up by the money center giants. Wall Street analysts said the merger accord between Fleet and Albany, N.Y.-based Norstar demonstrates the rapid pace of interstate banking mergers since state legislatures begain permitting regional mergers on a reciprocal basis. The U.S. Supreme Court decided in mid-1985 to permit the mergers. Fleet and Norstar in a joint statement billed the proposed merger as "a partnership of two companies." Both will continue to operate existing headquarters after the merger. Norstar holders will receive 1.2 Fleet shares for each one of theirs following Fleet's previously announced two-for-one split. Fleet shares closed today at 59-1/2, up 1/8, giving the deal an indicated value of 1.3 billion dlrs. That topped the proposed merger of Los Angeles-based Security Pacific Corp <SPC> and Seattle's Rainier Bancorpartion <RBAN>. The West Coast deal, announced about four weeks ago, is worth an estimated 1.2 billion dlrs. Chemical New York Corp's <CHL> acquisition of Texas Commerce Bancshares last year was valued at about 1.2 billion dlrs, making it similar in size to the Security Pacific-Rainer deal. The California combination of Wells Fargo and Co <WFC> and Crocker National Corp last year was worth 1.1 billion dlrs and there have been several bank mergers in the southeast valued in the 700-800 mln dlr range. "It's a merger of equals," said analyst John Rooney of Moseley Securities Corp. He said Norstar had a book value at the end of 1986 of 19.63 dlrs per share, while Fleet's book value was 28.02 dlrs. Rooney noted that Norstar chairman Peter Kiernan is in his 60's while Fleet's Terrence Murray is in his late 40's. He said Kiernan would probably head the combined company until his retirement then Murray could assume the top post. Analyst Thaddeus Paluszek of Merrill Lynch and Co said Fleet's earnings would have been diluted about two pct in 1986 on the basis of the merger terms announced today. He noted that Fleet has a "teriffic reputation" after having diversified in a number of financial areas. Fleet has established consumer banks in the southeast and is known as an innovator in securitization of mortgages. The merged banks would have assets in excess of 25 billion dlrs and be one of the 25 largest banks in the U.S. Norstar operates in most of New York state but not in New York City. Lougee said at some point in the future banking operations that both Norstar and Fleet operate in the state of Maine would be combined. The agreement between Norstar and Fleet includes a "lock-up" option designed to deter other acquirers. Each granted the other an option to purchase authorized but unissued shares amounting to 24.99 pct of the fully diluted shares outstanding.