Word: bankamerica
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Similar questions were being asked on the West Coast concerning First Interstate's offer to merge with BankAmerica. Chairman Pinola's bid to swap common and preferred shares of First Interstate's stock for BankAmerica holdings was valued by the smaller bank's officials at $18 a share. More skeptical financial analysts put the offer at $13 or $14 a share. The problem, said Paul Baastad, a vice president of the S.G. Warburg investment bank, is that "no one seems to know what BankAmerica is worth. It's a situation where a bunch of vultures are hovering around a wounded...
...BankAmerica's wounds, the result of bad loans to everyone from Western farmers to Latin American borrowers to ailing energy companies, would make almost anyone queasy. In the second quarter of 1986, the company announced a $640 million loss, the second worst in U.S. banking history.[*] Losses in the third quarter could reach $75 million. Last year the bank began a cost-cutting program that has involved the sale of $1.3 billion in assets and has led to some 5,000 layoffs among its 80,000 employees; 5,000 additional job losses are expected next year. BankAmerica officials predict earnings...
...about the bank have been so eroded by rumor and speculation." Indeed, only a month ago, Armacost bought airtime on California radio stations to discount rumors that the bank was about to ask for federal protection from its creditors. After the executive's resignation announcement, the rumor that former BankAmerica President A.W. Clausen would return circulated along with the news of a weekend meeting of the bank's 15 directors. In Washington, Clausen issued only a firm "no comment" about his possible new role...
Officially, BankAmerica has taken no position on First Interstate's merger bid. It was not the first time that such a marriage proposal had been made. First Interstate's Pinola, who built the regional bank to its current size through a series of daring takeover moves, reportedly approached BankAmerica with an informal merger offer last March, but the bigger bank preferred to retain its independence. Privately, many West Coast financial analysts do not think First Interstate can offer enough money to sway BankAmerica's management and board...
Such doubts are unlikely to cloud Pinola's vision. He spent 25 years at BankAmerica, eventually rising to executive vice president in charge of North American operations before moving to First Interstate in 1976. He was promoted to chairman of First Interstate's bank holding company in 1978. Pinola is well aware that from 1927 to 1956 his bank was part of the Bank of America empire founded by A.P. Giannini and eventually was spun off as an independent after Congress passed a law that mandated the divestiture. Pinola's dream is to rejoin his twelve-state regional firm with...