Word: bankamerica
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...After BankAmerica had suffered losses of $855 million over the past two years, Chairman A.W. Clausen gamely reassured stockholders last month that the unpleasant surprises were over. By year's end, he promised, the nation's second largest banking company would be back in the black. Clausen spoke too soon. Last week BankAmerica announced that it expected a staggering second- quarter loss of $1 billion, the largest in its history...
Reed's approach is unlikely to win universal applause in the banking industry either. For one thing, the measure will force other holders of Third World loans, most notably such profit-parched institutions as BankAmerica ($7 billion in Third World loans) and Manufacturers Hanover ($7.5 billion), to agonize over whether to match it. Not all the big banks are in the same relatively good shape as Citicorp, and thus they are less able to take such action. Says one top New York City banker: "Reed is being really selfish. The stakes are much higher than the future of a single...
...granite facades and oak-paneled boardroom doors of Wall Street, a bitter power struggle is under way that could well decide the fate of the $2.7 trillion U.S. banking industry. The battle pits behemoth against behemoth, commercial banks against investment-banking houses, prestigious names like Citicorp, Bankers Trust and BankAmerica against equally blue-chip concerns like First Boston, Salomon Brothers and Goldman, Sachs. But fundamentally, the struggle matches traditional U.S. bank-lending practices against computer-driven techniques that are drastically changing the way that more than $6 trillion worth of nongovernment credit is channeled through the U.S. economy...
While the prime-rate rise will help bolster bank profits, it cannot begin to make up for the reclassification of $6.8 billion worth of Brazilian loans. Seven major banks will see their profits reduced by a combined $112 million for the first quarter. At BankAmerica, 40% of quarterly earnings could be lost, while Manufacturers Hanover could take a hit of as much as 20%. If Brazil does not resume making interest payments on its debt this year, 1987 earnings would be reduced by some $1.9 billion for all U.S. banks. Anticipating such losses, Standard & Poor's has lowered the credit...
Last week Schwab, 49, signed an agreement to get his baby back. Having beaten out some 50 other bidders, he will pay $230 million in cash and securities. And if Schwab's brokerage operations increase in value during the next eight years, BankAmerica will pocket 15% of that gain. The price is steep, but Schwab is delighted to regain his independence. Says he: "My entrepreneurial instincts will be excited one more time...