BankAmerica, which earlier this week fended off a New York financier's attempt to unseat Chief Executive Samuel H. Armacost, on Wednesday denied that it was negotiating a merger with First Interstate Bancorp of Los Angeles.
"We are not negotiating a merger with First Interstate or anyone else," Armacost said in a statement.
Armacost's comments came in response to a Wednesday report in the Eastern edition of the New York Times that said First Interstate had approached BankAmerica with a merger proposal.
The BankAmerica statement left open the possibility that First Interstate Chairman J. J. Pinola had informally proposed a friendly merger but was rebuffed by Armacost. It was not clear when such talks might have taken place.
Armacost and the bank's board on Monday turned away a bid by former American Express President Sanford I. Weill to raise $1 billion in new equity capital for BankAmerica in exchange for Armacost's job.
The ambitious Pinola, a former BankAmerica executive, is known to be shopping for a major California bank acquisition to expand his company's presence in the rich California market. First Interstate has about 5% of California bank accounts, while BankAmerica, the leader in the state, has nearly 17%.
First Interstate refused all comment on the matter Wednesday. But sources at BankAmerica and on Wall Street said Pinola had made a friendly offer to acquire BankAmerica, although they differed markedly on the details.
According to one account, Pinola approached Armacost several months ago, when the bank's financial weakness was obvious but before the Weill bid. This would have put the offer a few months after Pinola had proposed a similar deal to Wells Fargo & Co., parent of California's third-largest bank.
Wells Fargo refused Pinola's offer and recently announced that it would acquire Crocker National Bank of San Francisco in the biggest bank merger in U.S. history.
A second version was reported by the New York Times but could not be confirmed. According to the newspaper, Pinola suggested a friendly merger to Armacost within the last week, presenting himself as a "white knight" alternative to Weill. The combination would be accomplished by a simple stock swap and Pinola would become chief executive of the combined bank, which would be the nation's second largest, rivaling Citicorp.
The newspaper said the investment banking firm Goldman, Sachs & Co. was advising First Interstate in its bid and Salomon Bros. represented BankAmerica. Both firms declined to comment.
A third investment firm, Montgomery Securites, based in San Francisco, was said to have conceived the deal. Jonathan Morgan, partner in charge of mergers and acquisitions, said the company was "not in a position to comment."
BankAmerica, parent of Bank of America, is the second-largest bank company in the United States with $118.5 billion in assets. First Interstate Bancorp is the nation's ninth-largest banking firm with $49 billion in assets and subsidiary banks in 15 Western states. It is the holding company for First Interstate of California, the state's fifth-largest bank.
BankAmerica emerged from the Weill scrape intact, but the bid gave rise to Wall Street speculation that the giant bank is "in play" despite strong denials from bank officials that it is for sale at any price.
In his statement Wednesday denying the merger reports, Armacost said: "We have a carefully thought-out strategy in place, which we believe will restore BankAmerica to its historic levels of profitability, enhance shareholder values and fulfill our responsibilities to our customers and the communities of which we are a part. That is where all our energies and resources are focused."