Bank One’s McCoy Resigns From Chairman, CEO Posts
Bank One Corp. Chairman and Chief Executive John B. McCoy, who built the fifth-largest U.S. bank through acquisitions, resigned Tuesday after his purchase of a credit-card company backfired, hurting profit and cutting the bank’s stock by almost half in four months.
Bank One stock rose nearly 11% after the bank said it’s seeking a replacement for McCoy, 56, ending the dynasty that ran the bank for three generations, starting with McCoy’s grandfather.
McCoy’s resignation comes after Bank One warned twice in less than three months earlier this year that trouble in its credit-card unit, First USA, would hurt earnings. First USA, purchased two years ago, has been losing customers to competition, forcing it to cut prices and spend more on marketing and hiring, the company said.
Before the announcement of McCoy’s departure, Bank One shares were down 47% since Aug. 22. They rose $3.33, or 11%, to close at $33.31 on the New York Stock Exchange.
Verne G. Istock, 59, the bank’s president and its former chairman, was elected acting chief executive, a position he will hold until a replacement is found for McCoy. The bank plans to find a permanent chairman and CEO “in the next few months,” it said in a statement.
The bank’s board elected John R. Hall, 67, the retired chairman and chief executive of Ashland Inc., the largest U.S. highway builder, as nonexecutive chairman in the interim.
Chicago-based Bank One was formed last year when Istock merged his First Chicago NBD Corp. with McCoy’s Banc One Corp. While it was called a merger of equals, many saw it as a takeover by Banc One, whose CEO McCoy ran the moneymaking businesses in the new bank.
It was McCoy’s Banc One that in June 1997 bought First USA. Credit cards contribute about 30% of earnings at Bank One, which is the No. 2 credit-card issuer in the world.
Since the profit problems began, the bank has been the subject of speculation it might be purchased, and McCoy’s departure raised the possibility that the bank’s board may be more open to a merger, analysts said.
“Now they are free to consider all alternatives, including the sale of the company,” said Anthony Polini, a bank analyst at Advest Inc. “With McCoy at the helm, he made it pretty clear that Bank One was not for sale.”
Also Tuesday, shareholders filed two lawsuits against Bank One, contending the company concealed information about its earnings to artificially inflate its stock price. The suits, filed in federal court in Chicago, claim the company made false statements about its financial results leading up to its second profit warning Nov. 10.
