It experienced a slew of bad loans at the end of the 1980s and the beginning of the '90s. And it took a restructuring and an intense investor-relations effort to convince independent investors that the company knew what it was doing. In early 1999, that effort succeeded. Between February and November of that year UnionBanCal's stock soared 26%.

But that effort was undone last year as the bank ran into another spate of bad loans. The company recently said it would report net charge-offs of between $165 million and $185 million for 2000's fourth quarter, and that nonperforming assets would rise to between $400 million and $450 million.

As a result, UnionBanCal is trying to remake itself again.

It plans to follow a much-trodden path, planning to shift its emphasis from lending to fee-oriented businesses.

In part, it plans to expand its private banking business in the West--a business that just about every other bank is fighting for. It's not clear why the Japanese-controlled bank would have an advantage in that area, but Piet Westerbeek, an executive vice president, says UnionBanCal's effort would be helped by the bank's strong ties with middle-market companies.

Private banking, though, is not UnionBanCal's top priority. According to Westerbeek, its chief ambition is to expand its institutional trust and custodial business nationwide. "We think we can make a real difference in the business," he says, noting that UnionBanCal and its predecessors, including Union Bank of California and Bank of California, had strong trust businesses.

"We want to go national," Westerbeek adds, claiming that UnionBanCal is becoming competitive with Bank of New York Co. and State Street Corp. Bank of New York and State Street, of course, have among the highest price-to-earnings ratios among the nation's banks.

Westerbeek says that the decision to adopt the new strategy was reached following a seven-month study by McKinsey & Co., the consultant.

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