Magazine article American Banker

BankAmerica Denies Deal Is Foundering

Magazine article American Banker

BankAmerica Denies Deal Is Foundering

Article excerpt

BankAmerica Denies Deal Is Foundering

SAN FRANCISCO -- BankAmerica Corp. and Security Pacific Corp. on Friday moved to squelch reports that their pending merger was in trouble or that the pricing might be changed.

In identically worded statements, the companies said they are moving "with all deliberate speed" to complete the merger, which is expected to close early next year.

Rumors of Loan Problems

The companies issued the statements in response to rumors that BankAmerica had found more problem loans than expected during a review of Security Pacific's books.

The banking giants did not comment on Security Pacific's credit quality. Analysts said they understood that the company's problem loans are slightly higher than expected, but within acceptable ranges.

"Credit quality problems are not even close to being a deal breaker," said Thomas K. Brown, analyst with Donaldson, Lufkin & Jenrette Securities Corp.

In late afternoon trading, BankAmerica was up 12.5 cents, to $40, and Security Pacific was up 75 cents, to $32. Reports that the merger would possibly be repriced were based on misinterpretations as word of Security Pacific's credit problems leaked out of the two banks, analysts said.

Salem Downgrades Security

The perception that the deal might be in trouble was further fueled Friday when George M. Salem, the bearish analyst at Prudential Securities Inc., downgraded his rating on Security Pacific to sell from hold. …

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