Back Again

For A.W. ("Tom") Clausen, 63, it was a tough homecoming last week. The man who reigned as president of BankAmerica from 1970 until his retirement in 1981 was back, this time as chairman, in his old offices on the 40th floor of the company's San Francisco headquarters building. There he was confronted by an unfamiliar and sobering array of corporate and financial problems. Clausen, however, did not seem unduly worried. Said he: "We are going in the right direction. I'm here to accelerate the pace."

The pace of change at BankAmerica (current assets: $117 billion) had already picked up quite a bit. The 15-member BankAmerica board had met over the previous weekend to recall Clausen hastily from his retirement in Washington. His task: to take over as chief executive officer from the man who was both his successor and now his predecessor, President Samuel Armacost, 47, who resigned on Oct. 10. Directors also bade farewell to BankAmerica Chairman Leland Prussia, 57, who took early retirement. Now Clausen must deal quickly with a flood of red ink amounting to almost $1 billion in losses in the past five quarters at BankAmerica. He also faces the unwelcome challenge of a more than $2 billion merger offer from Los Angeles-based First Interstate Bancorp (assets: $50 billion). Last week a new possibility was reported by the Wall Street Journal: Citicorp, the largest U.S. banking institution, with assets of $176 billion, was also pondering ways to acquire BankAmerica.

Many financial analysts think Clausen shares some responsibility for the bank's current woes. His previous tenure produced a rapid acceleration of BankAmerica's lending in energy, farming and the Third World, all areas that have since generated loan losses. Last week Clausen bristled at any mention of those decisions, but added, "Would I have done some things differently? Of course."

In the short run, Clausen does not intend to do things much differently than what Armacost, who was picked by Clausen as his successor in 1981, was at the end. Armacost had begun selling $1.3 billion in assets and chopping 5,000 staffers from an 80,000-member payroll. Another 5,000 layoffs are expected in 1987.

Clausen is expected to be equally remorseless in defending BankAmerica's independence. He has told the company's senior managers that he "remains to be convinced" of the virtues of the three-week-old merger offer from First Interstate and its chairman, Joseph Pinola, 61. For the record, however, Clausen declared, "We are seeking more information about the proposal. When we get it, we will weigh its merits."

More intriguing was the notion that mighty Citicorp was studying ways to acquire all or part of BankAmerica. Until a new California law takes effect in 1991, an outright buyout of BankAmerica by the New York institution is impossible. Federal bank regulators would also have to approve the move. Just as important, it hardly seemed likely that Tom Clausen had come out of retirement merely to preside over the sale of the empire that he did so much to build.