Richard Lehmann, the 51-year-old president and chief operating officer of Banc One Corp., is thought of by some as a "tough guy."
It's a good thing. Because the surprise choice for the No. 2 post - he had been with the Ohio company only three years when he got the job in 1995 - faces a formidable task.
For more than a year, Mr. Lehmann has been dismantling the $90 billion- asset bank's "uncommon partnership" - a loose-knit coalition of subsidiary banks - and replacing it with a national company organized by lines of business.
After 25 years of nearly nonstop acquisitions, Mr. Lehmann said in a recent interview that Banc One's growth ultimately became unmanageable. "We weren't making the size work for us," he noted.
By 1997, he said, the company plans to be down from 56 banks to 12 - one for each state in which it does business.
Banc One chief executive John McCoy said Mr. Lehmann was the obvious choice for the job of reconfiguring the bank because "a lot of changes we are making are changes he went through five or six years ago in Arizona."
After a long career at Citicorp, Mr. Lehmann earned his stripes as a turnaround expert at Phoenix-based Valley National Corp., which Banc One bought in 1992. Part of Mr. Lehmann's success at Valley was organizing around lines of business, much like Banc One is doing now.
Another key characteristic Mr. Lehmann brings to his job is the viewpoint of an outsider.
"What Banc One wanted to do was bring in a fresh perspective," said analyst Fred Cummings of McDonald & Company Securities Inc. "Historically, they promoted people ingrained in the Banc One culture - people who had been with the company 15 to 20 years."
The traditional power of the insider makes for one of the most difficult parts of the Banc One reorganization, Mr. Lehmann said. He is now attempting to inculcate in longtime bank employees a new way of working.
"There's a certain percentage that will jump on board and embrace change. There's the other set that understands and is reluctant to change," he noted. "And there's the other set at the bottom that says this is nonsense, and I'm going to vote with my feet.
"I worry about (yet another) group - the assassins. They smile, say O.K., and nod, and then they go back to their offices and say, 'I'm going to do everything to make sure this doesn't happen."'
Besides his tough-guy persona and his turnaround experience, Mr. Lehmann was chosen to head the reorganization because he had a track record. Since 1992, when he became chairman and chief executive of Bank One Arizona, the unit has been very profitable.
Stanley Calderon, chairman and chief executive of Bank One Chicago, said Arizona became the model for the bank's other state subsidiaries.
The unit has been more efficient than other state banks, Mr. Calderon said. "It was quickly apparent to McCoy that Rich could do this" for the whole company, he added.
However, there is more to the reorganization than just consolidating charters and shifting to lines of business.
The company plans to cut $400 million in costs by yearend 1997. It reduced its number of employees by a net 2,000 in 1995 - adding jobs in growing areas such as credit cards.
But it's still unclear where additional revenues or cuts will come from, analysts said. "They've been somewhat reluctant to talk about it for cultural reasons," said Nancy Bush, an analyst with Brown Brothers Harriman & Co.
Mr. Lehmann said the new structure will be a more efficient one which will spur revenue along lines of business. For instance, he noted, streamlining helped boost consumer lending 30% in 1995.
Mr. Lehmann's focus for the past year has been on revamping the retail system, but he said he'll now have time to rejigger other areas of the company since Kenneth Stevens has been hired to start May 1 as head of national retail operations.
Mr. Stevens is himself a sign of a changing Banc One. The 44-year-old is the president and chief operating officer of Taco Bell Corp. Not only is Mr. Stevens another high-level outsider, he's Banc One's highest-ranking executive lacking banking experience.
Now that he has been freed up from retail, Mr. Lehmann said he'll spend more time working with commercial banking - specifically emphasizing cash management and risk management products. Mr. Lehmann also wants to work with the company's finance subsidiary, Finance One Corp., and its subprime auto finance operation.
Overall, analysts believe Mr. Lehmann is qualified to head the transformation at Banc One.
"He's definitely the right person for the job," Ms. Bush said. "He's very numbers oriented, very return-on-equity oriented. He brings the Citicorp perspective to Banc One."
But Ms. Bush said it's likely Mr. Lehmann can't change corporate culture as quickly as needed. And, independent of the restructuring, Ms. Bush has two concerns that recently convinced her to lower her investment opinion of the bank. First, she predicts Banc One - which mostly sat out the acquisition game last year - will do a dilutive deal. Second, she expresses doubt whether Banc One is buying back a sufficient amount of its stock.
Mr. Lehmann scoffed at both complaints.
"I don't think capital management or acquisitions has a hell of a lot to do with our reorganization," Mr. Lehmann said.
Mr. Cummings and other analysts said they want to know where top-line growth is going to come from. Mr. Cummings said he believes that to attain its stated goals the company is going to have to get much bigger in the consumer finance business. And he believes that can only be done through acquisition.
Mr. Lehmann said Banc One doesn't need to make acquisitions in the near term, and can generate revenue growth through existing businesses.
Mr. Cummings, who has publicly stated that Banc One should buy Beneficial Corp., believes Banc One has little choice but to acquire. At the same time, he praises the company for not making any dilutive acquisitions - the only bank it bought in the past year was $6.3 billion- asset Premier Bancorp of Baton Rouge, La., which was acquired Jan. 2.
"They have been disciplined (about acquisitions) in this environment," Mr. Cummings said, "because they're not trading at a premium compared with others."
Mr. McCoy, the consummate deal maker, said Banc One still talks to any bank that might be for sale, but it won't buy anything that would throw the company off track from its recovery. The question on many observers' minds is, if it does acquire, what will it purchase?
"The bank is clearly not out of the acquisition business, and we're considering acquisitions other than banks," Mr. Lehmann said. "We just don't need to get big just for the sake of getting big."
Overall, analysts anxiously watch Banc One's next step.
"The challenge for the company is to pull it (the reorganization) off," said Dean Witter analyst Anthony Davis. "It will be a distinct long-term advantage, but they have a daunting task ahead.
"It's not a Sunday afternoon walk for any bank these days," Mr. Davis added, "particularly, for one going through a major cultural conversion."
