Rawls Quits Continental as Bank Scales Back Securities Operations
S. Waite Rawls 3d, who spear-headed an unsuccessful expansion of Continental Bank Corp.'s capital markets division, resigned from the Chicago-based company on Tuesday.
The move came three weeks after Continental resigned as a primary dealer of U.S. government securities and further pared back overseas operations that Mr. Rawls had expanded.
Mr. Rawls, 43, was not available for comment.
Lured from Chemical
A former managing director of global securities and foreign exchange at Chemical Banking Corp., Mr. Rawls was lured to Continental in 1988 by chairman and chief executive Thomas Theobald, who was keen to expand Continental's global trading and securities operations.
Continental did not have the credit ratings, deep capitalization, and technological infrastructure needed to support high-risk trading operations, said Art Soter, a banking analyst with Morgan Stanley & Co.
"The strategy was an uphill struggle from the start," said Mr. Soter. "There was little indication in any quarter that it was working."
Citing real estate lending woes and restructuring costs, Continental announced three weeks ago that it would take a $175 million special loan-loss provision during the third quarter, resulting in a heavy loss for the period.
Aside from resigning its primary dealership in U.S. government securities -- a key part of Mr. Rawls' empire -- Continental previously sold First Options Inc. and Securities Settlement Corp.
"We exited a number of businesses that Waite had built," said Mr. Theobald in a Tuesday letter to employees.
A Continental spokesman said the company will continue offering securities trading services to its U.S. corporate customers, but would do so through the corporate banking group instead of separate subsidiaries.
Mr. Soter of Morgan Stanley said Continental's strategy is to shrink the bank's operations down to a level that can be comfortably supported by its best customers. "The company will be exiting relationships where it does not derive satisfactory returns," he said.
PHOTO : S. Waite Rawls 3d He lost an uphill fight