Magazine article American Banker

Bank of British Columbia Rigs for Speed with Kaiser at the Helm

Magazine article American Banker

Bank of British Columbia Rigs for Speed with Kaiser at the Helm

Article excerpt

VANCOUVER, B.C. -- When Edgar Kaiser Jr. left Denver for Vancouver last year, after rebuilding the Denver Broncos in just three years for a $40 million profit, an associate speculated on his next move:

"He'll either take on the Autstralians for the America's Cup, or he'll run for prime minister of Canada. Either way, I wouldn't bet against him."

In view of Mr. Kaiser's record, that wasn't a partisan statement. But when Mr. Kaiser surfaced shortly thereafter as chairman and chief executive officer of the Bank of British Columbia, the consensus was that this time he had taken on more than he could handle.

As early as 1982, the Bank of British Columbia, a regional bank chartered in 1968, was clearly in trouble, with non-performing loans tripling between yearend 1981 and yearend 1982. By the end of 1983, loan losses, which had doubled to 1.1% of eligible loans at yearend 1982 compared with the previous year, leaped to 2.29%. Assets of $3.2 billion (Canadian) at yearend 1982 declined by $200 million (Canadian) at yearend 1983.

Management blamed the bad loans on the slow economic recovery in British Columbia andAlberta, the two western provinces where the bank operated 51 branches. The bank also has corporate and international offices in Los Angeles, San Francisco, London, Hong Kong, and the West Indies.

In May 1984, the bank suspended a dividend. This was only the second time in Canadian history that a bank had done so. In June, the president and two vice presidents resigned and, with the passing of a second quarterly dividend in August and the clear indication that 1984 would record a substantial loss, chairman Trevor Pilley decided on an early retirement.

When appointed, Mr. Kaiser was chairman of Kaiser Resources and Kaiser Steel, a director of Canadair and several other corporations, chairman of the Henry J. Kaiser Foundation, and a trustee of the California Institute of Technology.

There was also the mystique of his name: His father, Edgar F. Kaiser, built Kaiser Steel, and his grandfather, Henry J. Kaiser, built shipyards during World War II and automobilies thereafter.

Educated at Stanford, with an MBA from Harvard, Mr. Kaiser did a tour in the Lyndon Johnson administration as a White House assistant before joining the floundering Kaiser Resources coal operation in 1970. Within the decade, he had transformed the company into the largest metallurgical coal producer in Canada and sold it for a reputed $600 million.

"When I joined the bank," says My. Kaiser, "the first thing we did was run some numbers to develop a forecast. …

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