GREENWICH, Conn. (AP) _ Two old friends shook hands on a $1.65 billion deal in which Commercial Credit Group Inc. will take over Primerica Corp. to create ''an absolute powerhouse'' financial services company.

Gerald Tsai Jr., Primerica's chairman and a former wildly successful money manager, and Commercial Credit Chairman Sanford I. Weill announced Monday that Commercial Credit had agreed to acquire Primerica in the mostly stock deal.

The merger could create a major force in the financial services industry, offering such services as selling stock, advising corporations on mergers, making consumer loans, managing money and arranging mortgages.

The deal also could boost the fortunes of Greenwich-based Primerica, which is troubled by its 1987 acquisition of the struggling brokerage firm Smith Barney, Harris Upham & Co.

Weill, the former president of American Express Co., has a reputation for turning around struggling operations.

What is unclear is what role Tsai will play in the new company, which will retain the Primerica name. Directors of both companies approved the merger Monday.

Tsai, 59, will be the new company's largest individual shareholder, with about 1.5 percent of its stock, as well as a director and chairman of the board's executive committee. Weill, 55, will be chairman, chief executive officer and president - posts that appear to give him the upper hand.

When asked who will run the show, Tsai said, ''He (Weill) does. ... I feel fine about that.''

Tsai said he hoped to work on long-range planning.

''Sandy is somebody I have known for well over 25 years. He is a terrific business manager,'' Tsai said.

''I don't think we'll have any problems,'' added Weill, a founder of what now is the giant investment house Shearson Lehman Hutton Inc.

Primerica director Joseph A. Califano Jr., former U.S. secretary of health, education and welfare, said: ''They are a terrific team. This is going to be an absolute powerhouse company.''

Dudley Heer, an analyst with the brokerage firm Duff & Phelps in Chicago, speculated Tsai may have other plans.

''Tsai is a dealmaker,'' Heer said. ''In the investment business there is no retirement restriction ... and he is a very vibrant individual.''

Tsai, chairman of Primerica for 19 months, has surprised people before.

In college, he learned to play the saxophone by mastering the clarinet. He figured that once he learned the complicated fingering on the clarinet, he could easily play the less-complicated saxophone. The Chinese-born Tsai played both instruments in a campus band within six months of deciding to learn them.

Tsai earned a reputation as an investment wizard with some of his stock plays in the 1960s. He became involved with Primerica - then called American Can Co. - in 1982 when he sold it Associated Madison, which he had acquired earlier. Tsai transformed American Can from a manufacturing operation to a financial services concern.

Weill and Tsai denied that Smith Barney would be sold.

''I think there is a really excellent opportunity for Smith Barney to grow and prosper even in difficult economic environments,'' Weill said.

Primerica attributed its flat second-quarter earnings to the weak performance by Smith Barney, which suffered from lower revenues after last October's stock market crash.

Weill left American Express in 1985 after failing to become chief executive officer. He gained control of Baltimore-based Commercial Credit two years ago and in November was edged out by his former company, Shearson Lehman Brothers, in an attempt to buy E.F. Hutton Group Inc.

Under the agreement announced Monday, Primerica shareholders would receive one share of Commercial Credit common stock plus $7 cash for each share of Primerica.

Commercial Credit's stock fell 75 cents a share to close at $24.50 Monday on the New York Stock Exchange. Primerica lost 62 1/2 cents a share to close at $29.50 on the NYSE.