MasterCard CEO to Become B of A's Global Retail Chief

BankAmerica Corp. said Wednesday it has lured H. Eugene Lockhart away from MasterCard International, where he was chief executive officer for the last three years, to be head of global retail banking.

The appointment, which shocked the credit card industry but pleased analysts and followers of BankAmerica, ended the suspense of a five-month search to fill what is arguably the biggest consumer banking job in the country.

In Mr. Lockhart, 47, BankAmerica gains a seasoned senior banker steeped in the emerging technologies of alternative delivery systems. Effective May 5, he will assume the responsibilities of vice chairman Thomas Peterson, 61, who had announced his intention to retire when a replacement was found.

"BankAmerica has been a leader, but not a technology leader," said K. Shelly Porges, a marketing consultant in San Francisco and a former BankAmerica officer. "To the degree that he has a broad understanding of banking and the technological impact on it, it'll be interesting to see how adept he will be at bringing that to BofA."

"BankAmerica is one of the greatest banking franchises on the face of the earth," Mr. Lockhart said in an interview. "I'm tremendously excited about the opportunities to guide the bank through the future era."

Though Mr. Lockhart is well-regarded, his jump from a 22,000-member association of banks to a top-five U.S. holding company with more than $1 billion of annual retail earnings could require an adjustment.

MasterCard's work force, for example, is about 1,800. His new empire will have about 56,000 employees.

But the two organizations have scale and complexity in common. And Mr. Lockhart, aside from several years' work with major banks while at First Manhattan Consulting Group, has the hands-on experience of managing-and reengineering-the retail operations of Midland Bank of London in the late 1980s and early 1990s.

In his time in London, Midland launched First Direct, a branchless bank relying mostly on telephone and automated teller contact. Between 1989 and 1990 Midland improved domestic operating profits by 90%.

While at First Manhattan in 1993, Mr. Lockhart directed a landmark study on retail delivery systems, commissioned by the Bank Administration Institute, that drew on the experiences at First Direct and influenced many U.S. banks' subsequent strategies.

"I thought it was a brilliant stroke of luck for BofA that a fellow of Lockhart's background and caliber would elect to make the move," said Merril Lynch & Co. analyst Judah Kraushaar.

"It's a terrific choice on the bank's part," said Joel Friedman of Andersen Consulting in San Francisco. He called Mr. Lockhart "an extraordinary leader with a breadth of perspective that will bring real value to BofA."

Edmund P. Jensen, president of Visa International, said, "I think Gene's going to do a great job. He's got global experience, retail experience, a technology background, understands retail banking and alternative distribution systems-all the things a big retail bank like BofA really needs.

At MasterCard, where he will celebrate his third anniversary later this month, Mr. Lockhart attracted considerable attention for a systematic culture-change process that went way beyond his assembling of a new top- management team. (One of those members, former Citicorp executive Robert Selander, will succeed Mr. Lockhart as MasterCard president.)

The regimen included a flattening of management layers, a breaking down of bureaucracies, and more open lines of communication. Concurrently, the company relocated its headquarters from a Manhattan office building to a sprawling corporate campus in suburban Purchase, N.Y., which Mr. Lockhart said has reduced costs significantly.

But MasterCard largely failed to close Visa's market-share lead, at least in aggregate measures. And Mr. Lockhart's legacy will more likely be measured by the outcome of strategic moves like the 51% interest MasterCard bought in Mondex International.

That smart card venture's top U.S. shareholder, ironically, is Wells Fargo & Co.-BankAmerica's San Francisco-based archrival.

In another irony of Mr. Lockhart's switch from MasterCard, he will be joining the bank that invented BankAmericard, the predecessor of Visa.

Observers said Mr. Lockhart is highly analytical and strategically oriented-attributes that should mesh well with Mr. Coulter.

"Gene's experience at MasterCard and at Midland with a global perspective, and his consulting background in strategy, position him remarkably well," Mr. Friedman said. "I think he and Coulter will make a very good team."

But some question Mr. Lockhart's record in execution of strategy. "I'd give him mixed reviews on his stint at MasterCard," Ms. Porges said. "It was marked by fits and starts. He brought good vision but the execution was not always fulfilled."

She pointed to the company's declining market share and said it bought Mondex because its own smart card initiative was sagging and needed a jump- start.

For BankAmerica, the appointment solves the puzzle about retail management that surfaced more than a year and a half ago, after Mr. Coulter was named CEO.

Mr. Peterson, a longtime associate of retired BankAmerica chairman Richard Rosenberg, was named head of retail in September 1995, bypassing Luther Helms, who had been considered a contender not only for that position but also at one time for Mr. Rosenberg's slot.

Thirteen months later, Mr. Helms announced he was leaving, part of a broader changing of the guard as Mr. Coulter consolidated his hold on the $240 billion-asset bank.

Mr. Lockhart will join a nine-member executive committee, which will be renamed office of the chairman, and will be reporting to Mr. Coulter.

BankAmerica said business lines outside of retail that might fall under Mr. Lockhart, such as investments and trust, are under consideration.

Other top candidates on the short list for the retail job were believed to be Leslie Biller, who was recently named president of Norwest Corp., and Edward Miller, Chase Manhattan Corp.'s retiring senior vice chairman. Secura/Burnett Partners, a San Francisco search firm, assisted in the recruiting process.

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