Merger Market Steps Up in Banking Industry

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SAN FRANCISCO -- Regional banks such as PNC Bank, KeyCorp, Wells Fargo and Fleet Financial Group may be the next transaction candidates as the white-hot bank merger market reaches a new level of intensity.

To avoid being dwarfed by larger rivals, First Union could buy Fleet, and there could be a merger of equals between Wells Fargo and U.S. Bancorp, analysts said.

First Union Chairman and Chief Executive Edward Crutchfield "is probably calling (Fleet Chairman and CEO) Terry Murray as we speak," said James McDermott, chairman of Keefe, Bruyette & Woods, a brokerage specializing in bank stocks. "And U.S. Bancorp and Wells to me is a natural combination." Just …