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Los Angeles Times Interview : Richard Rosenberg : Rebuilding Bank of America's Mighty Financial Role

February 16, 1992|James Bates | James Bates covers the banking industry for The Times. He interviewed Richard M. Rosenberg in the bank chairman's office

SAN FRANCISCO — One year ago, BankAmerica Corp. Chairman Richard M. Rosenberg picked up his telephone to place a call that would change California banking.

Following reports early last year that merger talks failed between two of his rivals, Security Pacific Corp. and Wells Fargo & Co., Rosenberg called Security Pacific Chief Executive Robert H. Smith to suggest combining with BankAmerica. The result, announced last August, will be banking's biggest marriage ever.

Since taking over the parent of Bank of America in 1990, Rosenberg, 61, has launched on an unprecedented buying binge. Once the nation's quintessential international bank, BankAmerica's main push the past few years has been to expand its operations in the West through what Rosenberg and other BankAmerica executives believe are unprecedented acquisition opportunities stemming from the financial problems in the thrift and banking industries.

Rosenberg is also outspoken in his belief that there are too many banks in the United States and that reducing their numbers through mergers will help restore the industry's health. The merger binge isn't without pain for a lot of workers--some experts estimate as many as 100,000 banking jobs will be lost in 1992, more than 10,000 in the BankAmerica-Security Pacific merger alone.

A former Wells Fargo executive, Rosenberg is considered one of the country's leading marketing experts (one of his ideas became the scenic checks that banks issue). He earned the right to succeed BankAmerica chief A.W. (Tom) Clausen through his role in banking industry's biggest turnaround ever.

In the mid-1980s, BankAmerica nearly failed, dragged down by bad foreign loans and other problems. Rosenberg and a group of other former Wells Fargo executives working under Clausen not only stemmed the losses, but turned the bank into one of the nation's healthiest institutions, poised to be one of the country's most aggressive acquirers in the 1990s. Early last year, BankAmerica came within a shade of buying the failed Bank of New England from federal regulators, a move that would have given it branches on both coasts and brought BankAmerica a step closer to becoming a nationwide bank.

From his 40th-floor office, Rosenberg can look out at the sweeping, 180-degree view, from the Golden Gate bridge to the left and the East Bay hills on the right. Unlike the serious, statesman-like Clausen, Rosenberg is an affable executive whose comments are often marked with self-depreciating humor. During a recent speech in Los Angeles on banking, Rosenberg expressed shock that 750 people had showed up "because this is about the least exciting subject I can think of."

Question: Since you announced the Security Pacific deal, there have been more questions about California's soft economy and the real-estate market. How does this affect your view of the Security Pacific merger? Is it going to be tougher to achieve what you want?

Answer: If the economy continues to deteriorate, then there's going to be greater pressure on the loan portfolios of every bank--including Bank of America and Security Pacific--which to me means the merger makes all the more sense. If the loan portfolios are having greater problems, or if there's no growth in loans because there is no strong economy, then it really cries out for the greatest operating efficiencies that you can possibly have. One of the ways you control expenses is by eliminating redundant operations.

Q: There is a lot of anxiety among Security Pacific employees that they are going to bear the brunt of layoffs.

A: There is anxiety on both sides, because we have made the statement that we are going to pick the best person for the job in the new company. Obviously, that does create a lot of anxiety. To be honest, it's clearly created more anxiety in the Security Pacific organization than at BofA.

Q: Why is that?

A: A disproportionate number of the computer systems are going to be BofA systems. I think it's really important we make a decision early on which systems we are going to use. Someone who is working on those systems has a leg up. And the staff jobs are going to be heavily concentrated in San Francisco. That means people who don't want to move might have more anxiety.

Q: Some contrarian views have come out in the last few months suggesting that economists don't see as many savings in bank consolidations as some bankers do.

A: Many of those studies are not based on in-market mergers. They have been based on diversification out of an area. There was never a merger quite like this. The closest thing to it is the Crocker-Wells Fargo one, which totally disproves the studies.

Q: Why is consolidation so urgent?

A: The reason it's urgent is because it is the only way we are going to get stronger, healthy banks in this country and to eliminate a substantial number of banks. There are too many banks chasing too few customers.

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