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Weill Is Back as Major Player in Financial Field

August 30, 1988|BILL SING | Times Staff Writer

When Sanford I. Weill left the No. 2 job at American Express in 1985 after losing a power struggle, he vowed--in grand Gen. Douglas MacArthur style--to return, as head of his own financial services firm.

"I want to do my own thing, to run and build something again," Weill said, when asked why he was leaving.

On Monday, Weill not only made his vow stick--he took what may be the first step toward changing the competitive balance on Wall Street.

The planned $1.7-billion merger of Weill's Commercial Credit Group with the financial services conglomerate of Primerica Corp.--with the 55-year-old Weill as chief executive--fulfills his dream to head a broad-based financial service powerhouse that could rival such giants as American Express, Merrill Lynch and Citicorp. The combined firm will have under its umbrella such businesses as insurance, mutual funds and consumer lending as well as brokerage and investment banking through Primerica's Smith Barney, Harris Upham unit.

The merger marks the comeback to Wall Street of a man who already has proven his mettle at building one brokerage powerhouse--what is now Shearson Lehman Hutton--and could easily build another.

The deal also shines the spotlight back on a hard-driving executive who is widely recognized as one of the few truly charismatic and motivational leaders in financial services, a man equally comfortable talking deals on Wall Street or sharing beers on Main Street.

"He's a man with broad vision, he has great inspirational leadership qualities, he's forceful, and what he's building is going to be a formidable competitor in the financial services business," said Charles R. Schwab, the discount brokerage chief who, while a director of BankAmerica Corp., supported Weill's unsuccessful 1986 attempt to acquire that ailing banking firm.

"Sandy is a man of great energy and intellect, a real charismatic leader. When Sandy yells, 'Hit the beaches,' everybody hits the beaches," said Jeffrey B. Lane, president and chief operating officer at Shearson Lehman Hutton, who has known and worked with Weill since 1969.

An Early Failure

Weill also is described as a tough competitor who hates to lose, whether on the acquisition trail or the tennis court or golf course, where he spends much of his free time. "Sandy feels the same way about tennis as he does about business--he doesn't like to lose in either," said Lane, a recent tennis victor over Weill.

Despite an abundance of victories, however, Weill is no stranger to losing. Born of Jewish immigrants from Poland and raised in middle-class environs in Brooklyn, N.Y., the Cornell University graduate actually failed in his initial foray in the mid-1950s into the Wall Street jungle. His first choice as an employer, Merrill Lynch, turned him down and he ended up as a $150-a-week runner at a much smaller investment firm.

But that didn't stop the persistent Weill, who soon began to move up in the business. In 1960, he and three partners founded Carter, Berlind, Potoma & Weill--the forerunner to Shearson--with $215,000 in capital, $30,000 of it his own.

Over the next 20 years, Weill directed a dizzying sequence of some 20 acquisitions of rival brokerages, usually firms undergoing financial difficulties that Weill thought had good underlying value. Through those acquisitions, he gained a reputation as a tough negotiator and conservative risk taker who also had a short temper and little tolerance for overstaffing and staff inefficiencies.

"He had a discipline and would stick to it," says Perrin Long, brokerage analyst at Lipper Analytical Securities. "He would take the best from both companies and move ahead," Long noted, even if that meant letting go of some Shearson people. "That kept people on their toes."

Ruffled Feathers

By 1981, Weill's modest partnership had grown into Shearson Loeb Rhoades, the nation's second-largest brokerage when it was acquired that year by American Express.

But while he is credited with injecting an entrepreneurial spirit into American Express, Weill was no longer the top dog. Given the No. 2 slot as president behind American Express Chairman and Chief Executive James D. Robinson III--but with few real operational responsibilities--Weill felt trapped and restless. And his temperamental, confrontational style--plus his making no secret of designs for Robinson's job--ruffled a few feathers on American Express' board, insiders say.

Finally, in 1985, after helping to reorganize the management at American Express' troubled Fireman's Fund insurance subsidiary, Weill proposed to acquire the unit from American Express through a leveraged buyout. When the American Express board rejected the offer as too low, Weill felt he had no choice but to resign.

But the Fireman's Fund experience injected Weill with a new dose of entrepreneurial adrenaline, and soon he began to search for other opportunities while being touted by some in the media as Wall Street's most qualified unemployed executive.

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