Permanent Bank Holiday

Permanent Bank Holiday

Permanent Bank Holiday

May 16 1998 3:30 AM

Permanent Bank Holiday

Bank of America jilts its hometown of San Francisco for ... Charlotte, N.C.?

Old San Francisco, long gaseous with self-regard (self-esteem is for Oakland), suffered a grievous deflating April 13 when Bank of America--banker to entrepreneurs and immigrants; builder of new industries; capitalizer of the California Dream; financier, indeed, gallant financier of the Golden Gate Bridge--announced its merger with NationsBank to form BankAmerica and its plans to move bank headquarters from San Francisco to Charlotte, N.C.


There is a loss of face in the move of the bank's home office, as well as a blow to San Francisco's economy. To many San Franciscans, the rejection of the city is regarded as an insult to BofA founder A.P. Giannini. Old-timers recall that Giannini, who kept his desk on the banking floor itself, made loans to working people after inspecting their hands: If the loan applicant had callused hands that meant he was working, and he got the loan.

In the 49 years since Giannini's death, the 94-year-old BofA has discarded much of the old way, but even today the bank supports urbanity high and low. Last year it donated nearly $5 million to greater San Francisco, including $178,000 to the San Francisco Opera. Its San Francisco branches cash-at-par public benefits checks without requiring recipients to have bank accounts there.

While there was no run on the bank in the wake of the news, so great was the shock that the bank made grief counselors available to the stricken city. Hugh McColl, No. 1 at NationsBank and chairman of the combined operation, sought to reassure the city, koaning at a San Francisco meeting, "The headquarters is where we are. Now we're in San Francisco. This afternoon we'll be in Los Angeles."

Charlotte was bad enough, but by suggesting that the HQ is now also in much despised L.A., where San Franciscans say the definition of Old Money is someone whose checks clear the bank the first time, was a very bitter pill.


San Francisco Mayor Willie Brown spoke for the city when he said, "They're stealing our bank!" And while it may not be an actual defalcation, it certainly is an abscondment. The deal talks, worked out in only three weeks in the city's appropriately named Mandarin Hotel, were carried out in utter secrecy. "Bank of America is an important institution in our city--it has been so throughout the city's history," Brown said. "It'll be a shock to our economy, an economic crisis."

The most wired man in a wired city, the mayor first learned of the merger at 5 a.m. April 13, when a San Francisco Examiner reporter called to tell him the deal was being announced then in Manhattan.

To old San Franciscans, people whose hands have shaken the hands of those who came in the Gold Rush, the move is an act of lèse-majesté, an impertinence rivaling only that of Billy Ralston, who chose to go for a refreshing swim in the harbor one day in 1875 when his mighty Bank of California was crashing, rather than stay at the office. Ralston drowned. Of course, in financial circles, McColl, who constructed the deal, is believed to be able to walk on water.

The deal is colossal. The new institution, which might as well have been named TitanicBank, will be the United States' largest, with $570 billion in assets. It will:


be the No. 1 bank in loans, deposits, business lending (large and small), and ATMs (15,000);

be the United States' first coast-to-coast bank, operating in 22 contiguous states from Washington, D.C., to Washington state;

process one out of every four checks in the country.

Currently the bank has about 5,000 branches and 180,000 employees. While the branches are largely noncompeting, some will be closed, and about 15,000 jobs are expected to be eliminated. Staffers at the redundant former headquarters of BofA are believed to be the most vulnerable. Lifeboats have been constructed for the top dozen employees. BofA executive H. Eugene Lockhart, barely on the job for a year, left his job three days after the merger with a severance package including $22 million and stock grants cashable for an additional $17 million.


Although layoffs violate the Giannini ethos--in the bank's first 80 years there were none--the new masters were quick to invoke the founder's blessing on the deal. "This is a transaction I know A.P. would have done," wrote BofA head David Coulter to staffers.

Indeed, Giannini dreamed of creating the first nationwide U.S. bank. He started his bank in a former saloon in San Francisco's Italian North Beach under the name "Bank of Italy." It had no connection with any official bank of Italy, though a large part of its business, naturally enough, involved transfers to and from that country. In the 1920s, he bought banks in New York to establish a beachhead, but he was beaten back, in a three-decade struggle, by banking laws, regulators, and in-house perfidy. In 1928, he bought a small New York bank whose twin claims to fame were that it had been founded in 1812 and was named "Bank of America." Giannini quickly renamed his establishment.

McColl's insistence that the new bank's headquarters are in perpetual motion, swirling around him, didn't satisfy many natives, who wondered why one of the deal's few specific stipulations was moving HQ out of San Francisco.

That no compelling or even cant-ridden explanation for the move came forth made some wonder if it is a billion-dollar slight, born of City Attorney Louise Renne's long-running feud with the bank. Renne had said that BofA should place warning labels on its advertising. "No accurate records kept" was one she suggested. Last December, Mayor Brown told California government officials that he looked forward to a newspaper article headlined "Local Jurisdictions Prevail Over BofA."


Behind the tirades are a set of lawsuits on behalf of San Francisco and 300 other California government agencies charging BofA with mismanaging billions of dollars from 11,788 California municipal bond issues. Actual and punitive damages could top $1 billion.

BofA says it has acted in good faith, having already returned $41 million in unclaimed funds and nearly $5 million in accidental overcharges to the cities and state. It maintains it continues to review its handling of the bond issues, many of which it inherited when it merged with Security Pacific Bank.

City officials were stunned to think a multimillion-dollar bank might have been stung by million-dollar darts. But local investment banker Warren Hellman thought otherwise.

"Corporations are run by people, and people have feelings," Hellman told the San Francisco Chronicle. "I'm sure Coulter doesn't appreciate public officials delivering diatribes against BofA."

How is it, asked San Franciscans on considering the news, that it requires more public scrutiny to cut down a redwood than it does to uproot a bank?

It's a curiosity of our age that just as the press, unable to find ideological or philosophical concerns in public life, is obsessed instead with the puny private lives of the powerful, so also business, freed of the obligation to consider the public interest in its deal-making, gives play to the purely personal.

Of course, this works both ways. Shortly after BofA left, the Knight-Ridder Co., long established in Miami, announced it is relocating its home office to Silicon Valley or, as we in the city like to say, "the Bay Area."

The news was greeted with half-hosannas, since it further establishes the fact that the real power in Northern California is in Silicon Valley, not San Francisco. San Francisco continues to attract thousands of new residents, however, from the Valley. Four-million dollar Victorians sell in a day.

The real story of San Francisco may not be that it loses local headquarters--almost every city in America outside New York is a branch manager's town now--but that it may be the first major American city to be primarily a bedroom community. You can buy sheets, linens, and furniture now in the great granite temple on Grant Avenue that was once the headquarters of Security Pacific National Bank.