Weill Quits Campaign for B of A Post : Schwab Said to Be His Only Supporter on Bank’s Board
Sanford I. Weill abandoned his bid for the top job at BankAmerica on Tuesday, the day after the bank’s board of directors coldly rejected his offer for a second time.
In dropping his plan to raise $1 billion in new capital in exchange for the chief executive’s post, Weill said his proposal had been designed to revitalize the bank’s finances and management and restore its competitive position.
But, he said, “it has been my intent that my proposal to BankAmerica be a friendly one. It is clearly the prerogative of the board of directors to choose leadership and the future direction it thinks best for BankAmerica.”
The bank’s board, after a lengthy meeting Monday, said it had “no interest” in considering Weill for the chief executive’s job and insisted that the bank was capable of conducting its own affairs.
‘Distraction’ Ended
One board member, half-facetiously, described the Weill approach as “the most sophisticated job application I’ve ever seen.”
Samuel H. Armacost, BankAmerica’s president and chief executive, said in an interview that he was glad to have the Weill matter settled. He said it was a “distraction” that consumed inordinate amounts of management time.
The only board member to support Weill was Charles Schwab, chairman of the BankAmerica discount brokerage unit that bears his name, board sources said. Schwab wants to buy back the profitable unit, which he sold to BankAmerica in 1983, and apparently thought Weill was more likely to oblige than current management.
Schwab did not return telephone calls, and Armacost declined to comment. But a bank official said Schwab had “without question done damage to his reputation and credibility within the bank” by backing Weill.
Months of Turmoil
Armacost said the Weill initiative, coming after months of turmoil and heavy financial losses, had made BankAmerica “the Peyton Place of the financial world.”
Armacost was referring in part to a spate of rumors before Monday’s board meeting that his job might be in jeopardy. While the board removed Armacost from day-to-day management of Bank of America, the holding company’s chief subsidiary, Armacost contended that the board had in fact given him a firm vote of confidence.
Armacost now is chairman and chief executive of the bank as well as president and chief executive of the holding company. The board named Thomas A. Cooper, who joined Bank of America a year ago, president and chief operating officer of the bank with responsibility for daily decisions.
Board sources said they took the action to free Armacost to handle larger strategic questions and put a layer of management between him and the numerous operating units. The job switch was not intended to be read as a demotion for Armacost, the sources said.
A number of other senior executives were given new titles and new responsibilities in a realignment that an officer of another major California bank called “totally baffling.”
“They don’t want anybody to be able to read anything into it. They want to confuse their enemies,” this bank executive said.
Armacost’s apparent elevation gives Cooper wide latitude in operating the nation’s second-largest bank.
Cooper, the 49-year-old former president of Girard Bank in Philadelphia, was not available for comment Tuesday. But present and former associates expect him to stress new technology in an effort to slash costs while boosting prices for selected services.
Under Cooper, Girard pioneered the introduction of automated teller machines in the Philadelphia market. The bank also assessed high fees for returned checks and for frequent use of safe deposit boxes.
“He is tough,” said an executive of a competing Philadelphia bank. “He seems to strike a lot of fear in people who work for him, but it doesn’t necessarily translate into effective management.”
Bank of America spokesmen insist that Cooper’s appointment strengthens Armacost. Analysts, however, viewed the move as giving Armacost some additional time to show an earnings rebound. The bank lost $337 million last year, the third-largest annual deficit in U.S. banking history.
Stock Falls Again
“I think it indicates the board is giving Sam his ninth life and indicates they are confident enough about the earnings turnaround that they can refuse $1 billion in capital,” said Brent Erensel, senior banking analyst for Dean Witter Reynolds in New York.
“If I were Armacost, I’d breathe a little easier,” said Don Crowley of the Wall Street brokerage firm of Keefe, Bruyette & Woods.
Other Wall Street sources suggested that Armacost would have a year at most to show a return to strong growth or lose his job.
BankAmerica’s common stock fell Tuesday for the second consecutive day, losing 87.5 cents per share to close at $15.50. It was the fifth most heavily traded issue on the New York Stock Exchange.
Analysts attributed the drop to traders’ disappointment in the board’s rejection of Weill’s effort to become BankAmerica’s chief executive and to a sell-off by takeover speculators.
“The market voted with its pocketbook,” a source close to the Weill camp said.
Analyst Stephen Berman of the Wall Street firm of L. F. Rothschild, Unterberg, Tobin said the drop in the bank’s stock reflected “a vote of no confidence and a cooling off of speculative fever.”
