Offer of $2 Billion in New Capital Was Rejected by B of A
BankAmerica last week rejected an offer by a group of investors to provide as much as $2 billion in new capital in exchange for sweeping changes at the troubled banking company, it was learned Thursday.
The investment group, led by Stanley Hiller Jr., a Menlo Park corporate turnaround specialist, includes senior executives of several of the banking company’s major customers. The offer was made to BankAmerica’s directors last week, shortly before the board announced that it had hired former BankAmerica President A. W. Clausen to replace Samuel H. Armacost as chief executive.
Hiller said Thursday that he does not intend to renew his offer.
No Merger Talks With Citicorp
Separately, BankAmerica said it has had no merger discussions with New York’s Citicorp, the nation’s largest bank. In issuing the denial, the company said it was responding to a report in the Wall Street Journal that Citicorp was exploring ways of acquiring “all or part” of BankAmerica or its Bank of America subsidiary.
It was previously reported that Citicorp had expressed an interest in buying some of the branches of a BankAmerica subsidiary bank in Argentina or other BankAmerica assets in the United States or abroad that the bank might wish to sell. Citicorp declined to comment on the story.
Analysts and federal regulators dismissed the Citicorp rumors as “preposter ous,” noting that state and federal law prohibits such a combination and that the sheer size of the new bank would create formidable antitrust and regulatory problems.
Also on Thursday, BankAmerica denied that it was approached by any foreign banks about a merger or major investment in the bank. Published reports and industry analysts have suggested that a Japanese or West German bank might want to invest in the bank to gain a foothold in the lucrative California market.
Outright purchase of BankAmerica by a foreign financial institution is considered unlikely, however.
“For political reasons, it would be very hard for a foreign organization to take control of the nation’s second-largest bank,” one U.S. banking regulator said. There would be concern among regulators, he said, “about the country losing control of its banking resources.”
On the other hand, regulators probably would not raise serious objections if a foreign bank were to limit its equity investment in BankAmerica to 5% or less, he added.
Foreign Bidders
BankAmerica officials said foreign banks were possible bidders for a number of BankAmerica foreign assets, including a major Italian bank subsidiary, Banca d’America e d’Italia, and a smaller retail bank in West Germany, Bankhaus Centrale Credit AG.
Meanwhile, Hiller said Thursday that his group made its BankAmerica offer because they were “concerned that the bank was in major difficulties and would remain in difficulties without an infusion of capital” and a wholesale management shake-up. He said neither he nor any member of his investment syndicate was interested in working at BankAmerica but wanted to be consulted on executive choices.
Hiller would not identify the other members of his group or the investment banking firm that was to have helped them raise the BankAmerica capital.
The Hiller offer is similar to a bid made last winter by New York financier Sanford I. Weill, former president of American Express. Weill said then that he would raise $1 billion in equity capital for BankAmerica in exchange for the chief executive’s job. BankAmerica’s board summarily rejected Weill’s bid.
Approached 2 Years Ago
Hiller, who currently is chief executive of York International, an air-conditioning company based in York, Pa., said he first approached Armacost about raising capital for the bank two years ago. That offer, too, was rebuffed.
In the interim, Hiller was called in by directors of Crocker National Corp. to help turn around its ailing Crocker National Bank unit. He spent a year at the task until the company was sold earlier this year by its British parent, Midland Bank PLC, to San Francisco’s Wells Fargo & Co.
Hiller made an effort in 1982 to buy Kaiser Steel Corp. of Oakland but pulled out when he learned that the steelmaker’s financial condition was far worse than he originally believed.
The former chief of a successful helicopter company, Heller also has been associated with corporate repair efforts at G. W. Murphy Industries, Baker International and Bekins.
