SECURITIES AND EXCHANGE COMMISSION

                   Washington, D.C.  20549

                      __________________

                          FORM 8-K

                        CURRENT REPORT

                Pursuant to Section 13 or 15(d)
            of the Securities Exchange Act of 1934

                      __________________

Date of Report (Date of earliest event reported):  July 21, 1994

                     ___________________

                METROPOLITAN FINANCIAL CORPORATION
                __________________________________
       (Exact name of registrant as specified in its charter)


     Delaware                1-9018             45-0388518
     ________                ______             __________
(State of Incorporation)   (Commission     (I.R.S. Employer
                            File Number)    Identification No.)

                     1000 Metropolitan Centre,
       333 South Seventh Street, Minneapolis, Minnesota   55402
      (Address of principal executive offices)          (zip code)


Registrant's telephone number, including area code:  (612) 399-6000




Item 5.  Other Events.

On July 21, 1994, Metropolitan Financial Corporation ("MFC") 
and First Bank System, Inc. ("FBS") entered into an Agreement 
of Merger and Consolidation (the "Merger Agreement"), pursuant 
to which MFC will be merged into FBS.  In connection with the 
merger, each outstanding share of Common Stock of MFC will be 
converted into .6803 shares of Common Stock of FBS.  In 
addition, each outstanding share of Series B Preferred Stock 
of MFC will be converted into the right to receive $27.00 
(plus accumulated and unpaid dividends) in cash and the 
outstanding warrants to purchase 249,100 shares of MFC Common 
Stock will be converted to warrants to purchase 169,462 shares 
of FBS Common Stock at $6.96 per share.  The conversion ratio 
for the MFC Common Stock will be proportionately adjusted if 
the average closing price of FBS Common Stock during the 20 
trading days ending three business days before the 
stockholders' meetings scheduled to consider the merger is 
less than $33.00 or more than $40.50.  Either party may 
terminate the merger if the average closing price of FBS 
Common Stock during the 20 trading days ending three business 
days before the stockholders' meetings scheduled to consider 
the merger is less than $29.50.  The merger is intended to be 
tax free for federal income tax purposes to the holders of MFC 
Common Stock receiving shares of FBS Common Stock and to be 
accounted for as a "pooling of interests."

In connection with the Merger Agreement, MFC and FBS entered 
into a Stock Option Agreement pursuant to which FBS has the 
right to purchase up to 19.9% of MFC's outstanding Common 
Stock at a price of $24.66 per share if, under certain 
circumstances, MFC enters into (or the MFC Board of Directors 
recommends that the MFC stockholders approve or accept) an 
agreement to be merged with or acquired by a third party 
(including the acquisition of 20% or more of MFC's outstanding 
Common Stock) or a third party acquires 20% or more of the 
outstanding MFC Common Stock.

The merger is subject to various conditions, including the 
approval of the stockholders of MFC and FBS and required 
regulatory approvals.

The Merger Agreement and the Stock Option Agreement are 
attached hereto as Exhibits 2.1 and 2.2 and are incorporated 
herein by reference.





Item 7.  Financial Statements and Exhibits.

a.   Financial Statements of Businesses Acquired.

     Not applicable.

b.   Pro Forma Financial Information.

     Not applicable.

c.   Exhibits.  Attached hereto.

     2.1     Agreement of Merger and Consolidation, dated July 
             21, 1994, by and between First Bank System, Inc. 
             and Metropolitan Financial Corporation.  Omitted 
             from this Exhibit, as filed, are the exhibits 
             referenced in such agreement.  MFC will furnish 
             supplementally a copy of any such exhibits to the 
             Commission upon request.

     2.2     Stock Option Agreement, dated July 21, 1994, by 
             and between First Bank System, Inc. and 
             Metropolitan Financial Corporation.

    99.1     Press Release, dated July 21, 1994.



                          SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 
1934, the Registrant has duly caused this report to be signed 
on its behalf by the undersigned thereunto duly authorized.


                            METROPOLITAN FINANCIAL CORPORATION
                            (Registrant)


Dated:  July 25, 1994       By
                                 Steven B. Dewald
                                 Executive Vice President and
                                 Chief Financial Officer




                      INDEX TO EXHIBITS


Exhibit         Item	                               Page

2.1             Agreement of Merger and 
                Consolidation, dated July 21, 
                1994, by and between First Bank 
                System, Inc. and Metropolitan 
                Financial Corporation.  Omitted 
                from this Exhibit, as filed, are 
                the exhibits referenced in such 
                agreement.  MFC will furnish 
                supplementally a copy of any such 
                exhibits to the Commission upon 
                request............................

2.2             Stock Option Agreement, dated 
                July 21, 1994, by and between 
                First Bank System, Inc. and 
                Metropolitan Financial 
                Corporation........................

99.1            Press Release, dated July 21, 1994