Kanari: Cleaning Up the Mess

UnionBanCal Corp. has had its share of problems in recent years. But newly named president and CEO Norimichi Kanari says he plans to steer the $35.8 billion banking company clear of any new potholes. And as Kanari begins his term as the head of UnionBanCal, speculation is growing that the U.S. unit of Bank of Tokyo-Mitsubishi will be sold.Acknowledging that UnionBanCal "did experience an unacceptable increase in loan problems" in the last two years, Kanari, 54, says he will adhere to a strategy adopted late last year under former president and CEO Takahiro Moriguchi. Part of that plan was to diversify sources of revenue to lessen UnionBanCal's dependency on lending. The bank's problems stem in part from loans made to two ailing California utilities, Pacific Gas and Electric Corp. and Southern California Edison Co. Both companies have acknowledged they could face bankruptcy as a result of the state's energy crisis.Kanari says UnionBanCal, 64%-owned by Tokyo-Mitsubishi, will focus more heavily on retail banking and fee-oriented businesses. Kanari has had extensive experience in the U.S., stationed here since 1978. When he came to the U.S. he worked for Bank of Tokyo-Mitsubishi and became manager of the New York branch in 1997. In July 2000, he joined UnionBanCal as vice chairman and director, and was promoted to president and CEO last May."Management is never easy," he said in an email response to U.S. Banker questions. Despite his many years in the U.S., Kanari declined to be interviewed by telephone because his spokesman said Kanari's accent would make it difficult for the reporter to understand what the banker was trying to say.In his response, Kanari pointed out that he has 30 years experience in banking, and that he has two American vice chairmen who "have more experience in California banking and longer tenure in their positions than any of their peers."The market has been reacting well to Kanari's moves. Since its stock bottomed at roughly $17 a share last September, the market has rewarded UnionBanCal's shift in strategy. In mid-July, the bank was trading at $36, a 112% rise from the trough.Some analysts see the strong rise as evidence that investors are expecting a takeover. UnionBanCal has the third-largest market share in a vibrant state that's lush for banking (see community bank rankings in this issue), and many large banks would like a strong position in it.Kanari says "there is no such plan to my knowledge.""It's bizarre, [the stock price] just will not go down," says Rosalind Looby, an analyst at Credit Suisse First Boston. The consistent 11-month rise in the value of the stock, Looby says, is a sign that UnionBanCal is a potential takeover candidate.On July 12, UnionBanCal's stock price rose 7%, "and that was on no news," says Looby. "That looks like takeover speculation to me."