S.F. Mayor Opposes Bank Takeover Plan : Finance: He says Wells Fargo purchase of First Interstate would hurt California.
San Francisco Mayor Frank Jordan on Thursday joined Los Angeles Mayor Richard Riordan in opposing Wells Fargo & Co.'s attempt to take over First Interstate Bancorp.
In a news conference outside Wells Fargo headquarters in San Francisco’s financial district, Jordan said the merger would cost thousands of California jobs and hurt consumers and small businesses.
“I realize that these banks have a fiduciary responsibility to their shareholders to maximize earnings,” Jordan said, adding, “I believe that they also have an obligation to their consumers and a civic responsibility to the communities in which they have been allowed to prosper.”
Jordan made his views known to Wells earlier this week in a conversation with Rodney L. Jacobs, Wells’ chief financial officer.
“Mergers are a fact of life,” a Wells spokeswoman said Thursday. “We think there’s real value in having two California institutions merge and keep California banking strong, rather than losing control to an out-of-state bank.”
Wells’ hostile, $10-billion bid for Los Angeles-based First Interstate was predicated on its plan to slash $700 million a year from the combined companies’ costs by consolidating administrative and computer functions, closing branch offices and laying off workers.
Experts have estimated that job cuts could range from 7,000 to more than 9,000 in California and the other 12 states where First Interstate does business.
“San Francisco’s economy is on the rebound--we welcomed 5,000 new jobs to our city last year,” Jordan said. “This merger would take us in the wrong direction.” He said the combined bank would make fewer total loans to small- and medium-size businesses and do less lending in low-income areas.
Riordan attacked the deal on similar grounds Oct. 18, the day Wells made its offer public. He said he expected the brunt of the job losses to land on Southern California.
First Interstate has said nothing since that first day, when Chairman and Chief Executive William E.B. Siart said that he was “deeply disappointed” by Wells’ action but that the company’s board would consider it and respond in due time.
First Interstate reportedly has encouraged counteroffers, inviting two major regional banks--Banc One Corp. of Ohio and Norwest Corp. of Minnesota--to examine its books. Banc One officials Thursday confirmed to analysts in New York that they were considering a bid. Several other big banks have also been cited as potential suitors.
Last week, alarmed by rumors that San Francisco-based BankAmerica Corp. was having merger talks with North Carolina giant NationsBank Corp., Jordan met with BankAmerica Chairman Richard Rosenberg. The merger talks faltered this summer over questions of who would run the company and where its headquarters would be, sources told The Times.
Deploring the “merger mania which appears to have taken hold of our city’s banks,” Jordan said he was forming a “rapid-response team” of small-business leaders, community groups and business development officials to work with Wells to minimize the adverse impact if the deal does go through.
Jordan, the city’s former police chief, faces a tight primary election Tuesday against Assemblyman Willie Brown and former city supervisor and civil rights lawyer Roberta Achtenberg. The two top vote-getters will meet in a runoff next month.
A spokesman for Achtenberg said of the mayor’s announcement: “It seems like a publicity stunt more than anything he has any real control over.”
Brown’s campaign office did not return a call for comment.