Charles K. Gifford is a practical man.
The chairman and chief executive of Bank of Boston Corp. watched his predecessor, Ira Stepanian, get pushed out by the bank's board in 1995 for failing to find a merger partner. Believing that the pace of industry consolidation will only speed up, Mr. Gifford made fast work of acquiring BayBanks Inc., completing the megadeal in July.
But Mr. Gifford, whom everyone knows as Chad, is keenly aware that this is no time to rest on his accomplishments. In a town that's not known for warm weather, the heat is on.
So he and his team - including new president Henrique de Campos Meirelles - are now scrutinizing all operations of the $62 billion-asset company and selling off the less-profitable units. At the same time, they are pursuing a highly ambitious plan to replicate around the world the company's successes in New England and Latin America.
The aim of all this is double-digit earnings gains and 18% returns on equity. And the company appears right on target, with a 17.6% return so far this year, excluding special charges. Big banks as a group, by contrast, have been logging returns closer to 15% or 16%, analysts say.
If Mr. Gifford continues to hit his numbers, he could not only keep his board at bay but establish a new model for big banks as the industry battles burgeoning competitors at home and seeks to expand overseas.
Though many companies across the country are experimenting with strategies similar to Bank of Boston's, "most aren't as far along," said banking analyst Michael Granger of Fox-Pitt Kelton.
Mr. Gifford, at this point, is trying to make sure he has the right mix of businesses.
"I think all the time about where we should be adding investments and where we should be taking out investments," he said in a recent interview. Over the past two and a half years, he notes, the company has lopped off 11 businesses.
The next group of operations likely to be up for sale or joint venture will be the national consumer finance businesses: Fidelity Acceptance Corp., Ganis Credit Corp., and the bank's $978 million credit card portfolio. Mr. Gifford said he is looking hard at these businesses because he is not convinced the bank has the wherewithal to compete in them.
But while he's tough on some businesses, Mr. Gifford is arguably lenient with others. For instance, he is leaning heavily toward making further investments in Connecticut, an operation that some observers have long believed should be sold.
"In Connecticut, we don't have enough scale but it would be my strong preference to grow there rather than sell," Mr. Gifford said. "The growth- by-acquisition prospects are challenging, but we're continuing to look."
Among the possible targets cited by analysts: Peoples Mutual Holdings Inc. of Bridgeport, with $7.4 billion in assets, and Waterbury-based Webster Financial Corp., a $4 billion-asset thrift company.
If acquisitions aren't available at the right prices, Bank of Boston could expand in Connecticut on its own steam by building on BayBank's forte of retail banking, Mr. Gifford suggests. For example, the company could increase its supermarket banking and call-center activities.
That Mr. Gifford is anxious to stay in Connecticut isn't surprising, given his personal and professional commitment to New England. The affable, 54-year-old chief executive is a Providence, R.I., native married for 32 years to a woman from Hartford.
"I'm a New Englander," he said. "New England is just in us I guess."
Mr. Gifford's Yankee credentials are particularly important now that he has chosen a second-in-command from Brazil. Certainly, more than a few heads were turned in July when Mr. Gifford tapped Mr. Meirelles, who had been head of the company's Brazilian unit.
Even Mr. Gifford's father, the former chairman of Rhode Island Hospital Trust, a bank now owned by Bank of Boston, called the move daring.
"For a Yankee to pick someone out of South America to be No. 2 takes some intestinal fortitude," Clarence Gifford said.
But the younger Mr. Gifford, who worked hard to keep the New England Patriots football team in the Boston area, could afford to take a risk.
His own proper Brahmin background balanced the bank's leadership when Mr. Stepanian was chairman, and now he and Mr. Meirelles form the same kind of complementary team, many observers say.
Educated at the elite St. George's School in Newport, R.I., Mr. Gifford spent his summers on Nantucket, where he still owns a home. He studied history at Princeton University, graduating cum laude in 1964.
He's "the right kind of Bostonian ... a really gracious Brahmin," said bank investor Harry Keefe.
Mr. Stepanian, the son of Armenian immigrants, was raised in Somerville, a working-class community near Boston. He and Mr. Gifford were the epitome of Mr. Inside and Mr. Outside - Mr. Stepanian focused on shoring up what was then a troubled institution, while Mr. Gifford represented the bank among Boston's business and social elite.
In July 1995, Mr. Stepanian was ousted by the bank's board after proposed merger deals with CoreStates Financial Corp., Mellon Bank Corp., Fleet Financial Group, and Bank of New York all failed to come to fruition.
Six months after Mr. Gifford was named as Mr. Stepanian's replacement, he reached an agreement to buy BayBanks. The $2 billion deal meant that Bank of Boston would finally be able to build a forceful retail presence in New England; BayBanks had been considered the region's leading consumer bank, known for ground-breaking use of telephones, automated teller machines, and even L.L. Bean-like catalogues for reaching customers.
This summer, Mr. Gifford rounded out his first year at the helm by naming Mr. Meirelles president. Mr. Gifford is expected to maintain his role as Mr. Boston, while Mr. Meirelles represents the bank's international interests.
And nobody, it seems, could be more perfect for the job of global ambassador than Henrique Meirelles. A 51-year-old divorcee who speaks two languages and understands two more, Mr. Meirelles is widely known throughout Brazil.
Former colleagues call him astute, analytical, and excellent at capturing and capitalizing on the mood in a room or an entire organization.
"He's a wonderful manager of people," said Lawrence Fish, chairman of Providence-based Citizens Financial Corp. who worked with Mr. Meirelles at Banco de Boston Brazil, from 1973 to 1976.
Though highly driven, Mr. Meirelles apparently has little problem separating work from play. Often bedecked in striking, double-breasted suits, he "likes to eat out and loves to dance," Mr. Fish said.
The combination of Mr. Gifford and Mr. Meirelles makes "a formidable team," Mr. Fish added.
Mr. Meirelles already is pursuing bold plans for the 212-year-old bank. In a recent interview, Mr. Meirelles, the son of a former Brazilian government official, said he would like to mold Bank of Boston into nothing less than the next worldwide financial giant.
His hope is to take the success he created as president of the Brazilian unit and transplant it to Indonesia, Malaysia, the Philippines, and other underdeveloped markets around the world. According to Mr. Gifford, this effort will begin right away, starting in Peru, where Bank of Boston just opened a branch office.
Certainly, Mr. Meirelles made his mark in Brazil. During his ten years as president of the Brazilian unit, he helped boost assets at Banco de Boston to $4 billion from $70 million. Last year, operating income at the Latin American arm grew 41%, to $84 million, with the help of Brazilian businesses; the number of credit-card holders increased to 120,000, from 8,000, in 1994.
Mr. Gifford, for his part, is firmly convinced that the company's future growth will come largely from overseas. Before the BayBanks acquisition, profits from the international operations - which are largely concentrated in Latin America - contributed 18% to 20% to the bottom line. Adding BayBanks to the balance sheet diluted international's share of profits to 12% to 15%. But Mr. Gifford said his goal is 25% to 30% by the end of 1997.
Mr. Meirelles appears to have the plan down pat.
"The synergy with the retail bank in New England will enable us to develop (what) I hope will be one of the first global models for a consumer bank that could be applicable to several countries," he said.
Although Citicorp is a stiff competitor in Latin America and operates in many more countries (a total of 98) than Bank of Boston does (24), Mr. Meirelles and Mr. Gifford are not intimidated.
"Since we were able to compete with those most successful international banks in some specific large markets, as Brazil, as Argentina, this indicates to me that we'll be able to again compete successfully with those international money-center banks in other markets in which we could have a competitive advantage," Mr. Meirelles said.
The plan has clearly caught the fancy of analysts and investors. Bank of Boston's stock price has jumped nearly 26% since Mr. Meirelles' appointment on July 25, outpacing a strong general rally in bank stocks.
"I think that Gifford and his team are about as shareholder-value oriented as any bank management team that I follow," said Thomas Theurkauf, an analyst with Keefe, Bruyette & Woods. "For Chad, it's not size of the institution, it's profitability and performance. The new paradigm is pick your spots, and seek out areas where you can get extraordinary returns."
For Mr. Gifford and Mr. Meirelles, the extraordinary journey is just beginning.