Word: bankamerica
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...BankAmerica spent last week dodging a $3.4 billion merger bid by First Interstate Bancorp and an informal takeover offer from Citicorp. But the beleaguered San Francisco company realizes that its shareholders will scream foul unless it does something to rescue its foundering finances (more than $1 billion in losses in the past six quarters). To raise cash, BankAmerica has decided to consider selling one of its crown jewels, the highly profitable Charles Schwab discount-brokerage subsidiary. The most probable buyer is none other than Charles Schwab, the company's founder, who sold out to BankAmerica in 1983 for $52 million...
...pace of change at BankAmerica (current assets: $117 billion) had already picked up quite a bit. The 15-member BankAmerica board had met over the previous weekend to recall Clausen hastily from his retirement in Washington. His task: to take over as chief executive officer from the man who was both his successor and now his predecessor, President Samuel Armacost, 47, who resigned on Oct. 10. Directors also bade farewell to BankAmerica Chairman Leland Prussia, 57, who took early retirement. Now Clausen must deal quickly with a flood of red ink amounting to almost $1 billion in losses...
Many financial analysts think Clausen shares some responsibility for the bank's current woes. His previous tenure produced a rapid acceleration of BankAmerica's lending in energy, farming and the Third World, all areas that have since generated loan losses. Last week Clausen bristled at any mention of those decisions, but added, "Would I have done some things differently? Of course...
Clausen is expected to be equally remorseless in defending BankAmerica's independence. He has told the company's senior managers that he "remains to be convinced" of the virtues of the three-week-old merger offer from First Interstate and its chairman, Joseph Pinola, 61. For the record, however, Clausen declared, "We are seeking more information about the proposal. When we get it, we will weigh its merits...
More intriguing was the notion that mighty Citicorp was studying ways to acquire all or part of BankAmerica. Until a new California law takes effect in 1991, an outright buyout of BankAmerica by the New York institution is impossible. Federal bank regulators would also have to approve the move. Just as important, it hardly seemed likely that Tom Clausen had come out of retirement merely to preside over the sale of the empire that he did so much to build...