BankAmerica's stress test
Article Abstract:
The merger between BankAmerica Corp and NationsBank Corp has been troubled from the start and has resulted in the ouster of one of its masterminds, BankAmerica CEO David A. Coulter. Coulter and NationsBank CEO Hugh McColl Jr signed a merger agreement in Apr 13, 1998 to create America's second biggest banking company. However, while the new BankAmerica is currently number two in the US and number four internationally in terms of assets, its performance has not been impressive. In fact, its first earnings report revealed $1.2 billion of unexpected losses, pushing its stock down by 11% and compelling Coulter to resign as president. The troubles of the merged bank underscores the fragility of the banking industry. Although BankAmerica remains financially stable and has strong consumer and commercial operations, it is still vulnerable to larger industry forces, such as economic uncertainty and credit quality problems.
Publication Name: Banking Strategies
Subject: Business
ISSN: 1091-6385
Year: 1998
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The devil in the details
Article Abstract:
Wells Fargo & Co's good reputation as a retail banking pioneer is being clouded by the negative publicity generated by its recent acquisition of First Interstate Bancorp. While the bank is highly respected for its many important innovations, including supermarket banking, Internet banking, and small business lending through credit scoring and direct mail, it will take a long time for it to recover from the damage caused by the poor execution of the merger integration. Chmn and CEO Paul Hazen, who admits that the business philosophies employed in the deal were sound but the execution itself was poor, is now preoccupied with making up for lost ground instead of propelling his organization forward. Wells Fargo's experience demonstrates that uneven performance can undermine even the most carefully thought out strategy.
Publication Name: Banking Strategies
Subject: Business
ISSN: 1091-6385
Year: 1997
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The price of growth
Article Abstract:
Banc One Corp has become the third biggest credit card company in the US and has gained enormous potential to grow faster than the competition after acquiring credit card giant First USA Inc for $7 billion. The strategic rationale of the merger is widely recognized, but many are wondering whether Banc One paid too much for the opportunity to expand quickly. The deal's price tag is 570% of book value and 20 times lagging behind 12-month earnings. It is not expected to generate additional earnings per share for the bank until 1988. Banc One's M&A chief William P. Boardman admits that the success of the merger will eventually be determined by external factors, such as the performance of the economy and the bank's ability to maintain both its credit quality and earnings growth.
Publication Name: Banking Strategies
Subject: Business
ISSN: 1091-6385
Year: 1997
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