B of A and Lucky Banking on Each Other : Consumers: Full-service branches will be opened in 100 supermarkets; 295 other stores will get ATMs.

Bank of America said Thursday that it will establish banking operations in nearly 400 Lucky stores throughout California, creating the largest single supermarket branching system in the nation.

Under an agreement with Lucky, B of A said it will put full-service branches in 100 supermarkets and place automated teller machines and 24-hour customer service hot lines in Lucky’s remaining 295 stores in California.

Supermarket bank branches and ATMs have spread across the nation in recent years as both banks and supermarkets recognize the benefits of providing convenient services to consumers.

Groceries with ATMs generate about 10% to 15% more in sales because customers are willing to spend more when they have better access to cash and account balances, according to estimates by Dan Raftery, vice president of Willard Bishop Consulting, a supermarket consultant in suburban Chicago.

Though only a small percentage of supermarket shoppers utilize in-store full-service banking operations, there is enough activity to justify the operations, Raftery said.

“This gives consumers more reasons to shop at Lucky,” said John Benner, a senior vice president at the chain. “This is a competitive advantage for us.”

The Lucky-B of A deal is likely to prompt some of Lucky’s competitors to provide more in-store banking services by courting other banks or by installing ATMs in more of their stores, Raftery said.

San Francisco-based B of A, California’s largest bank, already operates about 90 full-service branches in stores in nine western states--including 14 in California. Some of those in-store branches are in the stores of Lucky competitors such as Vons.

B of A will maintain branches at current store locations in California but now plans to establish most of its future in-store state operations at Lucky markets.

The bank said the location of supermarket branches will be a factor in determining where it will build new free-standing bank branches. However, banking officials said it has not been determined if the expansion will cause some existing free-standing branches to close, because it has not yet decided which Lucky supermarkets will get full-service branches.

B of A said it will install Lucky supermarket branches at the rate of about 33 stores a year over the next three years.

Dublin, Calif.-based Lucky is the state’s largest supermarket chain. However, Lucky has fewer Southern California stores than Vons and ranks behind it in regional market share.

Lucky will fall to third place in the market share race if regulators allow Food 4 Less Supermarkets--operator of Alpha Beta, Boys, Viva and Food 4 Less warehouse stores--to proceed with a planned merger with Ralphs Grocery Co.