Bloodbath In Beantown

"A bloodbath" is how one Bank of Boston insider described it. On Oct. 29, Chairman Ira Stepanian abruptly fired three of his six top lieutenants, including two he had handpicked from outside the bank during the past three years. To some outsiders, the move seemed a power play: Stepanian got rid of a leading contender for his job, Kevin Mulvaney, the national lending chief. He also ousted Michael Simmons, who helped keep the bank solvent during the real estate crisis, and Newton Merrill, a Bank of New York alum.

But the shakeup also appears to represent an attempt to replace Bank of Boston's clubby, top-down management style with something more General Electric-ish. The new structure, which gives profit responsibility to 15 managers, "places a premium on organizational cooperation and reduces roadblocks to meeting customer needs," Stepanian says. Translation, say bank executives: Too many officers wanted to play by their own rules.

But can banking become entrepreneurial? Nancy Bush, a Brown Brothers Harriman analyst, expects the answer to be clear soon. The bank's profits have trailed the industry's for more than a year. Now that Stepanian has things his way, Bush says, "it's put-up-or-shut-up time."