Out-of-state banks will not be able to set up shop in the District under the regional banking bill passed by the City Council Tuesday night, but they will be able to buy existing Washington banks.

Bankers said privately yesterday that probably means there will be little change in the banking services provided District consumers and businesses, at least in the near future.

Over the longer run, however, bankers said competition in the District may change, depending upon whether the new owners of District banks decide to change the practices of their subsidiaries.

If the bill passes the 30-day congressional review period, it will clear the way for two large Virginia bank companies to buy two Washington banks.

Virginia's big Sovran Financial Corp., which owns the state's largest bank, wants to buy D.C. National Bancorp, the parent company of D.C. National Bank. United Virginia Bankshares, whose subsidiary United Virginia Bank is the second biggest in the state, wants to buy NS&T Bankshares Inc., the parent company of NS&T Bank.

If the transactions go through, both D.C. banks will be owned by Virginia companies that also own powerful Virginia banks. But D.C. National will not become part of Sovran Bank nor will NS&T become an arm of United Virginia Bank. The parent companies will be larger, but the banks they own will remain the same.

The bill permits companies that own banks in any of 11 southeast states -- including Maryland and Virginia -- to purchase Washington banks as long as those states allow Washington bank companies reciprocal privileges.

The other states in the regional compact are Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee and West Virginia.

A top official of one of Washington's largest banks said he expects more bank companies to buy D.C. banks, but noted that there "can't be that much action." There are only 17 banks in Washington and two of them already are sold. In addition, he said, the biggest Washington bank, Riggs National, is controlled by its chairman, Joe L. Allbritton, who has said he does not intend to sell it.

The bill does not permit out-of-state bank holding companies (as companies that own banks are called) to combine their banks into one giant institution with offices, say, in Virginia and Washington. Nor does it allow bank companies in the 11-state region to set up their own banks in Washington.

As a result, like nearly all the so-called regional reciprocal banking bills that have been approved by state legislatures around the country, the City Council version will have little immediate impact on local competition.

The City Council, however, under pressure from Mayor Marion Barry, set for itself a 30-day deadline to decide whether it should make changes that would allow bank companies from outside the 11-state region to establish their own banks in the District of Columbia.

Citicorp, the nation's biggest bank holding company and owner of the nation's largest bank, aggressively sought those changes in the D.C. City Council bill. Citicorp offered to lend $100 million in Washington over the next three years and provide at least 200 jobs in return for the right to set up a full-service bank of its own in Washington.

Citicorp is already a major lender in Washington. It has $300 million in outstanding commercial real estate loans, $100 million in lines of credit to local businesses and $40 million in outstanding automobile and residential mortgage loans.

But Citicorp wants the right to set up a subsidiary bank in Washington that would permit it to gather deposits in the city.

It used a similar strategy -- offering new investments and jobs -- to buy its way into Maryland last spring, over the objections of many Maryland bankers.

Local Washington banks, fearful that a Citibank/Washington would offer premium rates on deposits and cut rates on loans to attract new customers, fought hard for the regional reciprocal banking bill that was passed.

Luther H. Hodges Jr., chairman of National Bank of Washington, said he thinks Washington should open itself up to giant banks at some point in the future -- no such provision is in the bill -- but added that bank companies should be allowed to consolidate within the region before being forced to compete head-on with the giant, so-called money center banks.

All 17 Washington banks combined have $14 billion in assets. Citicorp has $160 billion.

If the District permitted parent companies of money center banks to set up subsidiary banks in Washington, there would be a sharp erosion in the deposits in Washington banks -- which already are limited in their deposit-gathering potential because the District is so small, Hodges said.

The debate over which banks should be permitted to do business in Washington and when, however, has been obscured so far by a game of one-upsmanship between D.C. banks and Citicorp -- each seeking to prove they can serve the District better. Local banks say that they already make all the credit-worthy loans the city needs and have pledged to find $5 million in contributions to the newly formed Neighborhood Economic Development Corp.

Citicorp has said local banks do not fill all the development needs in Washington and pledged its $100 million in loans would go to mortgage and small business loans, primarily in Anacostia, the H Street NE corridor and downtown.