Citicorp Holding Stakes in B of A, First Interstate : West German Bank Agrees to Buy BankAmerica Unit in Italy for $603 Million

Citicorp, the New York banking giant that is seeking a bigger toehold in California, has purchased stakes of 2% in San Francisco-based BankAmerica and nearly 5% in First Interstate Bancorp of Los Angeles, it was reported Wednesday.

The two California banking concerns have been locked in a continuing takeover struggle, with BankAmerica hurriedly selling off assets and vowing to take all other measures necessary to resist First Interstate’s $3.4-billion acquisition offer.

BankAmerica agreed Wednesday to sell its Italian banking subsidiary to Deutsche Bank of West Germany for $603 million, a transaction that will yield the ailing parent of Bank of America a one-time gain of $282 million.

‘Positioning’ by Citicorp

The Citicorp stock purchases could merely be investments, either for itself or on behalf of customers of its trust department. However, a banking industry source said the holdings could also be viewed as “positioning” by Citicorp, which is known to covet Bank of America’s retail branch network in California.

Still, this source added, “I don’t see how this gives Citicorp much leverage.” Current California law on interstate banking prohibits Citicorp from buying banks here until 1991, although California Assembly Speaker Willie Brown Jr. on Monday introduced legislation that would allow Citicorp and other out-of-state banks to bid for BankAmerica.

A Citicorp spokesman declined to comment on its holdings in the California banks, which came to light in data filed with the Securities and Exchange Commission and compiled by CDA Investment Technologies of Silver Spring, Md. Citicorp’s purchases were first reported by American Banker, a daily trade publication.

Institutions Trim Holdings

The data shows that while institutional money managers were reducing their holdings in BankAmerica by 2.1 million common shares, Citicorp bought 3,094,736 shares to end the period with 3,113,495 shares of the beleaguered California banking giant.

It was not clear Wednesday how many of the shares were held for Citicorp’s own account and how many were held for its customers, although Citicorp is listed as having sole voting authority for all but 3,300 of the shares.

Citicorp similarly has sole voting authority for almost all of the 2,098,814 First Interstate shares that it held Sept. 30. Virtually the entire stake was bought during the third quarter.

BankAmerica Chairman and Chief Executive A. W. Clausen was in New York on Wednesday and is believed to have met with Citicorp Chairman John Reed at a gathering of bankers who have loans outstanding to Mexico.

BankAmerica’s sale of its Italian unit, Banca d’America e d’Italia, is expected to close by Dec. 31, permitting BankAmerica to report a profit for the fourth quarter despite a continuing loss from operations.

BankAmerica has posted operating losses totaling nearly $1.5 billion during the past seven quarters.

Banking industry sources said BankAmerica will announce next week the sale of its consumer trust department. The unit, which has more than $10 billion under management and annual revenues of around $50 million, should fetch at least $60 million.

Chicago-based Northern Trust Co. is among the finalists in the bidding for the trust unit.