Directors of BankAmerica Corp. held an unusual Sunday board meeting in Los Angeles to consider financier Sanford I. Weill's plan to pump $1 billion in new capital into the embattled institution in exchange for the top job at the nation's second-largest banking company.
The directors, who gathered at 3 p.m. for a session scheduled to last seven hours, were also expected to consider alternative plans put forward by bank management to thwart Weill's bid. Management reportedly has secured commitments from three of its investment bankers to raise large sums of capital without a change in its top officers.
Other possible actions include a management shake-up or a financial restructuring that might include the spinoff of all or part of a number of BankAmerica subsidiaries.
New Details of Plan
Meanwhile, new details of Weill's plan and its rationale emerged. The former American Express president is arguing that the bank's image has been so badly tarnished by by massive loan losses, management upheaval and financial scandals that wholesale changes are needed.
The Weill plan is said to include beefing up the bank's credit procedures, which led to 1985 loan losses of $1.6 billion, attracting new directors and securing outside liability insurance for them. BankAmerica's directors and officers liability insurance policy was canceled in April after the bank sued six past and present officers in the wake of a $95-million mortgage securities scandal. The coverage currently is provided by a captive insurance unit in the Bahamas formed by the bank.
Weill approached the bank in January with his initial proposal to raise capital and assume the presidency from Samuel H. Armacost but was firmly rebuffed. He returned last week with a more detailed plan, which is now before the board.