SAN FRANCISCO — A. W. Clausen was awakened at 6:30 a.m. in his Washington home 18 months ago by a transatlantic telephone call that disturbed not only his sleep but his retirement.
The caller, an English acquaintance, told him that the rumor mill was filled with news that "the bank" was going bankrupt, that it might have to close its doors.
Clausen, who had recently retired as president of World Bank, the international development agency, immediately responded, "How can that be? The World Bank is one of the strongest institutions in the world."
But the caller corrected him. The rumors were swirling around Bank of America, where Clausen had been chief executive for 17 years before taking the World Bank post in 1981.
Posted Modest Profit
And Bank of America was, indeed, in deep trouble. Not about to close its doors, but beset by mounting losses.
That telephone call in September, 1986, which Clausen described for the first time in a rare interview on Thursday, marked the beginning of his return to the legendary San Francisco bank.
By 4 a.m. West Coast time that day, he was on the phone to a former colleague in San Francisco, whom he declined to identify. Less than a month later, Clausen was named chief executive again by a board of directors eager for him to restore the old luster--and the old profitability.
Last month, BankAmerica, the bank's parent company, reported an operating profit of about $100 million for the fourth quarter of 1987. It was the second straight quarter of modest operating profits after more than two years of huge losses that were only partly masked by the sale of assets, including its San Francisco and Los Angeles headquarters buildings.
In a 40-minute interview in his 40th floor office overlooking the Golden Gate Bridge and the San Francisco Bay, Clausen said he was not ready to declare Bank of America completely recovered, but he insisted that the institution is healing and promised that 1988 would bring further profitable quarters, barring unforeseen economic glitches.
And, he said, the time has come for the press to alter the way it has come to refer to the bank.
"BankAmerica Corp. is in a much improved situation," he said. "So much so that I would hope that the media would stop referring to it as 'the troubled Bank of America' and begin referring to it as 'the recovering Bank of America.' We are recovering."
Since his return to the helm of the company in October, 1986, Clausen has presided over the gradual resurrection of the bank's profitability. The loan portfolio has been cleaned up by giving earlier attention to troubled loans. Overhead has been cut by reducing the work force by 18,600 jobs over the last two years.
As a result, bank stock analysts agree that Bank of America is making steady progress toward solid profitability, steady but slow.
Even Clausen, wearing his most optimistic outlook for a series of press interviews, acknowledged that there is still a long way to go.
"Two quarters don't necessarily make the game,' he said. "After two quarters of underlying operational profitability, we have got the ball out to the 10-yard line. No. Make that the 17-yard line. That is a far more comfortable position than operating behind the goal line, where we were for 10 or 12 quarters."
Clausen will be 65 in less than two weeks. When he returned to the bank, he told friends that he would stay long enough to make sure that it was restored to long-term health. Then he would go back to his interrupted retirement.
He says that long-term health, while in view, is not at hand and he plans to remain for an undetermined period.
Along with restoring solid profitability, Clausen said he has worked to rejuvenate the morale of both the senior management and the line employees, a task he acknowledged as difficult, given the staff reductions and other cutbacks that have trimmed the bank's staff.
Indeed, additional jobs will be eliminated in 1988--he declined to say how many--as the bank works to achieve a ratio of expenses to revenue that is in line with its peers among the largest United States banks.
For some, it is difficult to imagine Clausen as a cheerleader for good morale. His reputation during 17 years as chief executive was that of a demanding ruler. One bank executive told a reporter last year, "I never looked forward to my meetings with Clausen. You always left with his teeth in your ass."
But Clausen said he now spends more time working to improve staff morale and restore the aura of the glory days of the 1970s. Even Clausen knows, however, that B of A probably will never again be the world's biggest bank, as it was when he left in 1981.
"I had to come back and say, 'There is nothing wrong with the bank that can't be fixed,' " he said. "It's going to take time, but I have every confidence that it is getting fixed, that it is going to get better. There isn't a speck of doubt in my mind."