B of A President Resigns to Restore Confidence in Bank : Clausen May Take Post Again
Samuel H. Armacost resigned today as president and chief executive of BankAmerica Corp. to help restore confidence in the troubled banking company.
The company’s board of directors will meet Sunday in San Francisco to name his replacement, who reliable sources said is likely to be former BankAmerica President A. W. Clausen, 63, the man544696431years ago. Clausen stepped down as president of the World Bank in June.
Armacost’s departure comes as BankAmerica, parent firm of San Francisco’s Bank of America, tries to stem growing losses and fight an unsolicited takeover offer from First Interstate Bancorp of Los Angeles.
Model of Profitability
When Armacost, 47, became chief executive in 1981, Bank of America was the nation’s largest bank and a model of growth and profitability in the industry. It has since suffered nearly $1 billion in losses, fallen to No. 2 in size, closed hundreds of branches here and abroad, and become the country’s leading problem bank.
Investors have lost confidence in the bank and rumors have circulated in financial circles that BankAmerica was on the brink of bankruptcy or about to be rescued by federal authorities.
“External perceptions about the bank have been so eroded by rumor and speculation that a change in management is necessary to help restore confidence in this organization’s capabilities and future,” Armacost said in a statement announcing his imminent resignation.
Best Interests at Heart
“The best interests of our shareholders, customers and employees have always been my principal concern, and if my stepping aside serves that purpose, I do so willingly.”
Armacost’s departure has been expected since the bank reported a stunning $640-million loss for the three-month period ended June 30. However, Clausen’s expected return to the bank he helped lead to prominence is a shock.
Some BankAmerica managers who moved into top positions after Clausen left to head the World Bank blame him for leaving them with billions of dollars in problem loans and outmoded computer and other systems. They say that he caused the bank to grow too big too fast, venturing recklessly into every aspect of finance and every corner of the globe in search of profits.
Figure of Stature
But Clausen supporters say he is a figure of stature who will provide stability and leadership at a time the bank needs it most. Thousands of BankAmerica employees remain loyal to Clausen as a man who brought the bank respect.
Armacost clearly lost the support of the bank’s board of directors, which grew increasingly impatient with his optimistic forecasts and the bank’s miserable results. Sources said the board’s key executive committee was instrumental in engineering Armacost’s ouster.
Sources said members of the committee--which includes retired Transamerica Corp. Chairman John R. Beckett and retired Chevron Corp. President John R. Grey--also have had informal contacts with First Interstate Chairman Joseph J. Pinola about the desirability of the proposed merger.
First Interstate last week offered to acquire BankAmerica in a stock swap deal worth about $2.8 billion. That offer, disclosed Monday by BankAmerica, remains to be acted on by BankAmerica directors.
