Takeover Rumors Fuel Bank Stock Rally

Takeover rumors are sweeping through the banking industry, pushing up share prices of several large banks around the country.

New laws allowing banks to branch across state lines, overall weakness in bank stock prices and a cash glut at many banks have fanned the rumor flames.

Shares of Shawmut National Corp., a banking company based in Hartford, Conn., rose 7.5 percent on Wednesday on rumors of a takeover. Talk centered around an acquisition by Bank of New York Co. Inc. or Bank of Boston Corp.

Shawmut’s shares were up 75 cents to $22.37 1/2 Thursday on the New York Stock Exchange.

Shares of First Fidelity Bancorp., New Jersey’s largest bank, shot up last month on takeover rumblings. Rumors circulated that the bank was holding merger talks with NationsBank, a Charlotte, N.C. company and the nation’s third-largest bank.

First Fidelity’s shares are up 8 percent since early December and were trading at $48.12 1/2 cents Thursday, down 50 cents.

Several small and medium-sized bank mergers and acquisitions have taken place in recent months.

But a combination involving a bank the size of Shawmut or First Fidelity hasn’t happened since New York-based Keycorp and Cleveland-based Society Corp. merged last March.