NEW YORK — Citicorp Vice Chairman Thomas C. Theobald, who lost out to John S. Reed for Citicorp's top spot in 1985 and has since won accolades for invigorating the banking giant's huge investment bank business, resigned Monday to become chairman and chief executive of Continental Illinois.
Theobald's appointment to the No. 1 job at the nation's 14th-largest bank was widely hailed as a coup for Continental Illinois.
"This is certainly a feather in the cap of John Swearingen and the board of Continental Illinois," said James J. McDermott Jr., research director for the investment firm Keefe Bruyette & Woods in New York.
Swearingen, who was brought in as chairman and chief executive of Continental Illinois by the Federal Deposit Insurance Corp. in 1984 to help rescue the beleaguered bank, announced three months ago that he intended to leave as soon as he could find a replacement. He will stay on as a director and chairman of the executive committee to ease the transition.
Theobald, 49, also was named chairman and chief executive of the corporation's bank subsidiary, Continental Illinois National Bank & Trust Co., and a director of both the parent company and the bank.
He also will serve as president and a director of Continental Illinois Holding Corp., the entity responsible for the claims of shareholders who suffered losses when Continental Illinois was hit by bad loans it acquired from Penn Square Bank of Oklahoma City and had to be rescued by FDIC. Speculative energy loans led to Penn Square's collapse.
To succeed Theobald, Citicorp named Michael A. Callen, 47, currently the group executive in charge of Citicorp's North American institutional banking activities. He, in turn, will be succeeded by George L. Davis, 52, a 23-year Citicorp veteran until he left in 1981 to become executive vice president of First Chicago Corp.
Of his former rival, Citicorp Chairman Reed said: "Tom and I have had an understanding for several years that after Citicorp's investment banking activities were successfully launched, he would be pursuing new professional interests."
Theobald and Reed were fierce competitors under longtime Citicorp Chairman Walter R. Wriston. And when Reed won Wriston's job in 1985, speculation had it that Theobald would leave the nation's largest bank, where he had then spent 25 years in various commercial banking jobs.
But he stayed. And shortly after Reed's elevation, Theobald was rewarded. From head of institutional banking, he was tapped to develop Citicorp's huge investment banking operations.