BankAmerica Corp. plans to expand some of its international businesses but shrink others as part of a broad reorganization aimed at reducing risk, said Robert P. Morrow, managing director for international corporate banking.
In a telephone interview from Hong Kong on Friday, Mr. Morrow termed press reports that the bank is planning a large-scale retrenchment from international activities an "oversimplification."
"We absolutely intend to remain in international business, but we want to reduce our exposure in places it doesn't make sense," Mr. Morrow said.
"This is a business issue and a capital allocation issue."
BankAmerica of Charlotte, N.C., has recently been the target of speculation that it is planning to drastically cut its international operations as a result of its merger with NationsBank Corp. in September. Large trading losses in foreign capital markets further fueled the retrenchment rumors.
Last week James Hance, BankAmerica's chief financial officer, told analysts the bank wants to cut its emerging markets exposure by 50%. Mr. Hance's remarks confirmed reports that BankAmerica officers around the world have been ordered to sharply reduce their exposure in Latin America, Asia, and Eastern Europe.
In the fourth quarter, BankAmerica cut its total Asian, Central and Eastern European, and Latin American exposure to $36.7 billion, from $41 billion. It said it will sell off its retail banking operations in India, Taiwan, and Singapore.
Mr. Morrow, who was named head of international corporate banking this month, said the old BankAmerica had refocused its overseas operations in corporate banking in the late 1980s. But it subsequently reassumed a diversified mix of operations outside the United States when it acquired Security Pacific Corp. in 1992.
The current reorganization, he said, is aimed at giving a better focus to a "crosshatch of geographic and product-oriented business with a lot of overlap."
"What we are doing is stepping back and taking a look at clients, products, and markets, and weighing them against risk, volatility, and how we want to best employ our capital," Mr. Morrow said.
"The result is going to be expansion in some areas, contraction in others, or staying even in still others."
He added that BankAmerica has no blanket strategy for all of its overseas operations. Instead, Mr. Morrow said, "we will let the terrain dictate the tactics."
But he acknowledged that the bank might well tie its global corporate finance and capital markets activities more closely to the work it does for U.S. and foreign corporations rather than engage in overseas banking for its own sake. The more-focused approach had long been favored by the old NationsBank, which did not compete overseas until two years ago.
"There is a compelling logic to serving a U.S. client base," Mr. Morrow said. "But what we really want to do is blend the two strategies so that we can hit the right balance."
At the new BankAmerica, overseas operations were initially set to remain in the hands of longtime BankAmerica executives. But NationsBank has clearly gained the upper hand since BankAmerica chairman David Coulter resigned last year, international bankers said.
With NationsBank setting the course, they added, the combined entity is likely to take a far more narrow approach to doing business overseas.
Though BankAmerica clearly wants to remain in international banking to serve corporate customers, the bank may be throwing the baby out with the bathwater in its attempt to reorganize, some competitors said.
Once BankAmerica has cut back, they said, the bank will find it extremely difficult to expand again when local economies rebound. In the meantime, these bankers said, growing uncertainty is undermining morale at BankAmerica offices overseas.
"They're not at all happy being told by some bean counter from Charlotte who has no idea what they're doing to either close operations or not handle any new business," said one senior U.S. banker.
"They are definitely cutting back, and the risk is they won't be there when those markets bounce back."
In the fourth quarter BankAmerica cut its total Asian exposure, including Japan, to $22.9 billion, from $25.2 billion at end of the third quarter. It cut its Latin America exposure to $13.1 billion, from $14.8 billion, and its Eastern and Central European exposure to $764 million, from $1.0 billion.