San Francisco Mulls Effect of Merger
From the day its founder, Amadeo Peter Giannini, opened the doors of what he first called the Bank of Italy in a renovated North Beach saloon, Bank of America’s growth has been interwoven with the lore and legend of this city.
Giannini’s bank helped rebuild the city after the 1906 earthquake and fire. It financed construction of the Golden Gate Bridge. It helped put San Francisco on the map as the financial center of the West after World War II.
So the city was abuzz Monday with the stunning news that Bank of America’s parent, BankAmerica Corp., had agreed to merge with NationsBank and will move its corporate headquarters to Charlotte, N.C. Even Mayor Willie Brown was caught by surprise, said his spokeswoman, Kandyce Bender. BankAmerica Chairman David Coulter called Brown at home early Monday morning to break the news--after the merger had made front-page headlines.
Brown made no public comment, but others were not so reticent.
“I’m stunned and disappointed,” said San Francisco County Supervisor Leslie Katz. “The Bank of America has been a significant community participant for many years. It is the kind of business we tout as having grown and thrived in San Francisco. We will do whatever we can to maintain a real presence.”
Added Gladys Hansen, city archivist emeritus and a San Francisco historian: “We’ve lost the Emporium, the City of Paris, the White House and Roos Brothers,” all San Francisco-owned retail stores that went out of business. “If we keep going like this, part of our unique San Francisco is going down the drain, and it is something that will never be recovered. People used to brag that these were companies owned by a San Francisco family.”
Bank of America, City a Good Match
Bank of America has always seemed a good fit with this city of immigrants and iconoclasts. Its founder, the autocratic Giannini, was himself the son of Italian immigrants. He started the Bank of Italy in 1904, catering to what was then the overlooked clientele of immigrants, farmers and laborers. He was regarded as a hero in the heavily Italian North Beach neighborhood because he would lend to its residents when no one else would.
When the earthquake struck, Giannini is said to have walked 17 miles from San Mateo to open the bank by placing a desk made of two barrels and a plank in front of the wreckage and lending rebuilding money to North Beach merchants and residents. Eventually, Giannini’s bank became the state’s largest agricultural lender and the first to open a statewide system of branches.
Hansen recalled that after the earthquake, Giannini made loans to laborers by looking at their hands. “If they were calloused, he figured you were working, and he loaned the money. He was behind the little man.”
As Giannini built the bank, he cemented his relations with the city where it was born. For years, Bank of America has been a pillar of the city’s philanthropic community. The bank donated $1.34 million to San Francisco charities in 1997 and another $1.8 million to charities that operate both in San Francisco and elsewhere in California. From AIDS self-help groups to the Philharmonia Baroque Orchestra, the Bank of America has contributed to hundreds of local nonprofit organizations and most of the city’s art institutes.
Since the mid-'60s, its corporate headquarters has soared 52 stories above the financial district and covered an entire downtown city block. The 2-million-square-foot carnelian granite edifice is as much a landmark on the city’s skyline as the Coit Tower. The late San Francisco Chronicle columnist Herb Caen used to poke fun at the massive black granite abstract sculpture that adorns the building’s large plaza, calling it the “Banker’s Heart.”
So as the rest of the nation pondered the larger issues of what this merger means to banking, San Franciscans wondered what it would mean to them.
Nothing terribly dramatic, insisted Bank of America spokesman John Keane.
“The corporate headquarters will be in Charlotte, with the chairman and the CEO,” he said. “But the headquarters of the global wholesale bank will be in San Francisco. Mr. Coulter will be located here. We will still be very, very involved in the community.”
The wholesale operation serves some of the world’s largest corporations from 38 international locations.
It is too early to say how many of the projected 5,000 to 8,000 jobs the new company expects to eliminate will be trimmed from the San Francisco area, where 10,000 BankAmerica employees work, Keane said.
“But we are always going to be involved with the city of San Francisco. It is a part of our heritage. It will be the center of our wholesale banking and remain a hub of our activities.”
Also unknown is the impact the merger will have on Montgomery Securities and Robertson Stephens & Co., two of San Francisco’s largest securities firms. NationsBank bought Montgomery last year, and BankAmerica bought its competitor, Robertson Stephens.
Some Business Leaders See Boon for City
Some business leaders said Monday that although news of the merger was shocking, mergers of banks in a globally competitive market are inevitable and ultimately this merger may prove a boon to San Francisco.
“For San Francisco to be one of the centers of the largest and most prestigious banks in the world can’t be a bad thing,” said Matthew Le Merle, a consultant who serves on the executive board of the San Francisco Partnership, a coalition of business leaders and city officials that works to attract and retain new businesses.
“This is not a story of what this means to San Francisco. This is a story of the formation of what may well be the best international banking franchise in the world and America’s leading financial institution,” Le Merle said. “That San Francisco has been able to be the home of the Bank of America is something that San Franciscans should be proud of.”
But Rhea Serpan, chairman of the San Francisco Chamber of Commerce, was more cautious in his assessment.
“If you lose a corporate headquarters, you lose some cachet,” Serpan said. “The whole financial industry is critical to San Francisco and its growth and to California and its growth.” Serpan said he was encouraged by the fact that the new mega-bank will continue to have a presence in San Francisco. And the city, he said, continues to enjoy the white heat generated by the economic boom in Silicon Valley.
“We will continue to be a big player. The good thing for San Francisco is that we have many very good, strong institutions here. If there is some job displacement, the economy that exists now is able to absorb people very well,” Serpan said.
Mara Brazer, a managing partner of the San Francisco partnership, said there was nothing San Francisco could have done to prevent the move of the new bank’s corporate headquarters to North Carolina.
“These global business forces are independent of a particular city’s attraction and retention measures,” she said. “City initiatives can help keep a company, but they can’t prevent mergers and they can’t prevent the dominant company from relocating a headquarters to its own hometown.”
San Francisco’s task now, she said, “is to wait until the dust settles and then find out what needs they have that are location specific and see whether you can accommodate them.”