Retail Rehab At Bank Of America

A lot is riding on who the new consumer-banking chief will be

It's an awesome job--commanding an empire of more than 2,000 branches in 10 Western states, 6,900 automated teller machines, hundreds of supermarket banking facilities, plus subsidiaries in Asia--and BankAmerica Corp., which runs the nation's biggest retail banking facilities, must fill it fast. Early in October, the nation's third-largest bank announced the impending retirement of consumer banking chief Thomas E. Peterson and the abrupt resignation of Luke S. Helms, his top deputy. The San Francisco-based bank didn't name a successor. Instead, it said it had launched a search for an executive who would combine the responsibilities of the two, becoming BofA's retail czar and second most powerful figure. But amid uncertainty at the top, present and former staff members warn that the bank's retail operations, currently 44.8% of net income, have been drifting. Complains one BofA retail middle manager: "We're not sure where the bank is going."

The shakeup at least shows that CEO David A. Coulter is set to make big changes in BofA's sprawling retail network. Coulter, 49, is a brainy, numbers-crunching corporate banker who turned BofA's global wholesale network into a prodigious moneymaker before becoming chief executive at the beginning of the year. While he lacks a retail background, he has openly complained that consumer banking at BofA needs an up-to-date business strategy.

OUTSIDE HEAVYWEIGHT. Coulter, who declined to be interviewed, has been boning up on consumer banking while pushing the development of a new strategy. He has decided to hire a heavyweight from outside the bank as his new retail chief, say people close to the bank. Peterson, 61, a gruff consumer-products specialist, wanted to retire last year, but was asked to stay on during a transition, the bank says. And, say former staff members, Coulter judged that Helms, 52, a supersalesman who ran BofA's highly profitable Seafirst Corp. unit in Washington State before moving to headquarters to oversee BofA's branches, lacked the analytical skills for the top retail job. Neither was available for comment.

To find its retail chief, BofA recently hired the San Francisco search firm Secura/Burnett Partners, according to people familiar with the search. Speculation centers on top retail banking strategists experienced in managing far-flung operations. One name being floated is Bank of Boston Corp. Vice-Chairman Edward A. O'Neal, who was recently shunted into a staff job following a merger. Some executive recruiters think a dark horse from outside banking could get the nod. O'Neal didn't respond to a request for comment.

Coulter generally gets high marks for his deliberate style and meticulous planning. But analysts say his handling of the retail transition has been awkward. With Helms gone and Peterson a lame duck, "it clearly would have been better for BankAmerica to have identified a strong successor sooner," says Brown Brothers Harriman & Co. analyst Raphael Soifer. What's more, current and former BofA managers note that Coulter's prolonged review of retail businesses has hindered the bank from taking full advantage of the confusion over at archrival Wells Fargo & Co., which is digesting its acquisition of First Interstate Bancorp. BofA managers say important product decisions have been postponed, such as the timing for bringing Smart Card, a new payment system, to market.

HOME DEPOSITS. For its part, a BofA spokesman insists the retail network is thriving. The bank earned $952 million from consumer operations in the first nine months of 1996, he notes, producing a respectable, though not exactly industry-leading, 17.56% return on equity for those businesses. It also introduced several new products, including an updated computer-banking service geared for the home.

Still, BankAmerica's chief is clearly worried that the institution is falling behind in an era of technological change, especially in exploiting nonbranch distribution systems. Wells Fargo, which now challenges BofA throughout the West, is rapidly moving away from traditional branches and runs its retail operations at a much lower cost. So the daunting task for Coulter's new consumer-banking chief will be to figure out a way to fight back--making sure that BofA is not just the biggest, but also one of the best.

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