There may be cause at some point to worry about major U.S. banks falling into the hands of foreign owners, but such concerns seem groundless for the time being in Maryland, where they've recently surfaced.

State Sen. Thomas Patrick O'Reilly (D-Prince George's) still seems to have a valid reason for wanting to study the implications of foreign ownership. O'Reilly's primary concern, of course, is the stability of banking in Maryland. As a policy matter, however, O'Reilly believes that the issue is much larger than the future of banking in the state. That, too, is a defensible position.

"I believe someone should have a position on it -- if not the states, then the federal government should," O'Reilly said last week. "I think we should at least try to understand these new developments {in bank mergers and acquisitions} as they develop. The whole question of foreign ownership of banks is one that raises concerns. I think to do nothing about it until we have a crisis would be irresponsible."

That, said O'Reilly, is why he has asked for hearings on the possible effects of a takeover of Baltimore Bancorp by First Maryland Corp., the U.S. subsidiary of Allied Irish Banks PLC. O'Reilly wants assurances in this situation, at least, that there won't be an outflow of deposits and profits from Maryland to Ireland.

O'Reilly's concerns about First Maryland's offer may be unfounded, but he certainly has a sound argument in stating that the issue of foreign ownership of U.S. banks is one that ought to be examined more carefully.

His timing in raising the issue now, however, puts him in a rather awkward position. Indeed, his reaction to First Maryland's offer has been interpreted as a ploy to help Baltimore Bancorp fend off an unwanted takeover.

First Maryland, the state's second-largest bank holding company and owner of First National Bank of Maryland, made a surprise offer of $17 a share for Baltimore Bancorp's stock in April. Baltimore Bancorp's management rejected the offer several times, accusing First Maryland of initiating a hostile raid.

"I didn't believe and I hope I didn't create instability by raising the question," O'Reilly said, denying that his call for hearings is designed to run interference for Baltimore Bancorp. "I want to assure everyone that my first interest is the citizens of Maryland."

O'Reilly still is troubled by First Maryland's offer because, he said, of the potential for a hostile takeover.

But the overriding concern -- one that has nagged Maryland legislators for years -- is "allegiance." That was very much on the minds of Maryland officials in late 1984 when a special committee appointed by the governor to study the implications of interstate banking addressed the issue.

The committee ultimately concluded that the best interests of the state would be served if all Maryland-chartered bank holding companies were permitted to participate in interstate banking. The same applies to foreign-owned bank companies that declare Maryland as their "home state."

A declaration of "home state" status, the committee concluded, "is considered sufficient evidence on the part of foreign-owned banks that their principal base of operations and corporate allegiance is in Maryland rather than elsewhere."

The committee's recommendation was prompted, of course, by the fact that two of Maryland's leading banking institutions were, and still are, owned by foreign interests. Allied Irish owned 43 percent of First Maryland's stock at the time (it has since bought the balance of the shares) and First American Bank of Maryland is an affiliate of the District's First American Bankshares, which is controlled by Middle Eastern investors.

"The argument to include foreign-owned banks in a regional {interstate banking} compact is that the foreign investment is an infusion of new capital into the state," the committee maintained. "Representatives of First National Bank of Maryland indicated that the investments by Allied Irish Banks will provide a basis for improved services in the First National system throughout Maryland. Under federal law, foreign-owned bank holding companies operating in the United States must declare as a 'home state' their principal base of operations. Such a declaration is strong evidence of the foreign bank holding company's corporate allegiance to the state."

That assertion by the committee and the opportunity to study First Maryland's operation and its relationship with Allied Irish for seven years now should give legislators a fairly good idea of where the institution's allegiance lies.

Indeed, by approving an interstate banking bill, Maryland's General Assembly implicitly embraced the committee's position on allegiance. Granted, that was more than five years ago, but nothing in the interim seems to indicate there is cause for alarm on the part of legislators.

Certainly, as the sole owner of First Maryland -- and eventually perhaps Baltimore Bancorp -- Allied Irish is entitled to profits from its U.S. operations. After all, bank holding companies in the District, Virginia, New York and Pennsylvania reap profits from banks they own in Maryland.

The more important consideration, it seems, is whether or not Allied Irish has stripped First National Bank of Maryland of domestic deposits. That appears not to be the case at all. Maryland Bank Commissioner Margie H. Muller's report last year to the General Assembly on the effects of interstate banking fully addressed that issue.

"While there have been numerous acquisitions of Maryland banks, both large and small, by bank holding companies headquartered both inside and outside the state, the people of the state have not suffered any diminution of banking services," Muller said in the report to the General Assembly. "Rather, there has been an increase in the variety of services offered," she continued.

The report covers the 16 commercial banks in Maryland that were controlled by out-of-state and foreign interests this time a year ago. "Loans are being made in Maryland to Marylanders; the acquired banks' parents are investing in Maryland; Marylanders are being employed by the acquired institutions in greater numbers; the acquired banks are profitable, leading to higher tax income for the state; profits are remaining in Maryland banks; credit is being made available to consumers, including low- and moderate-income borrowers and to small businesses; interest rates charged and paid for services by the acquired banks are competitive with Maryland-owned banks, and in some instances more attractive."

O'Reilly says he would like to have a public discussion of foreign ownership "to see if that's good for Marylanders" and to inform legislators of the possible effect of another takeover by First Maryland. A good place to start would be Muller's report, which is an excellent primer on the subject.