`Dick Rosenberg's Manifest Destiny'

If it wasn't clear before, there is no mistaking it now: Chairman and Chief Executive Richard M. Rosenberg fully intends to make BankAmerica Corp. live up to its ambitious name.

Already the dominant force in Western-states banking, BankAmerica began its push east on Jan. 28, announcing its plan to buy Chicago-based Continental Bank Corp. for $1.9 billion. The deal will put BankAmerica among the nation's biggest corporate lenders, on top of its rich retail empire. And it will win a firm foothold for further expansion.

The Continental merger, though, reflects a grander scheme--what Joel Friedman of Andersen Consulting calls "Dick Rosenberg's manifest destiny." Indeed, the deal is only the latest in a string of acquisitions that has boosted BankAmerica's already huge asset base by 81% since 1991.

BIG FISH. With his jocular demeanor and fireplug physique, Rosenberg doesn't fit the mold of the staid BankAmerica leaders of the recent past. But he shares their quest for empire. When he took the helm in 1990, Rosenberg was certain that in the coming consolidation, only two or three U.S. banks would remain as truly global players. BankAmerica, he decreed, would be one of them. That meant the bank would have to grow, and not incrementally. "We're not enamored with size per se," Rosenberg insists. "But you need a large bank to operate in a global environment."

The first big move: BankAmerica's $4.7 billion acquisition in 1992 of Security Pacific Corp. It was an expensive deal: Analysts say the price may have been several billion dollars too high. The result: flat earnings per share for 12 quarters and an anemic stock (chart).

Rosenberg was more careful with Continental. True, BankAmerica will pay 17 times Continental's trailing earnings--a heady premium. By buying back $500 million of BankAmerica stock to help pay for the deal, though, stockholders should suffer no earnings dilution.

"MORE VALUABLE." In fact, the deal mostly has won praise. Both banks have a large base of corporate customers, but there is little geographical overlap. The 2,000 corporate accounts at Continental provide a rich market for BankAmerica's loans and fee-based services. With its better credit rating and huge retail network, moreover, BankAmerica should make Continental stronger. David M. Schulte, an investor in companies such as Carter Hawley Hale Stores and Schwinn Bicycle, looks forward to dealing with Continental's new owner. "The extra capital and the international reach will make them more valuable," he says.

Of course, all these benefits depend on BankAmerica's ability to manage its expansion and Rosenberg's ability to refrain from growth for growth's sake. Says Stephen T. McLin, a former BankAmerica executive and now president of America First Financial Corp.: "I think he'd like to go out bigger than Citicorp." Rosenberg responds that he has "never thought in terms of legacy-leaving." He's probably being overly modest. He clearly wants to build a powerful global bank--and a profitable one.

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