Shares of Mellon Bank Corp. slipped a notch Thursday amid anticipation, sparked by a report in The Wall Street Journal, that a successor to chief executive officer Frank V. Cahouet is about to be named.
But the Pittsburgh banking company was not alone. Bank stocks sold off broadly after disappointing fourth-quarter earnings for several key industrial companies dragged the entire market down.
The Standard & Poor's bank index fell 0.70%, as did the Dow Jones industrial average, which tumbled 1.19%.
Bucking the trend, the Nasdaq bank index, comprising mostly smaller banks and thrifts, rose 0.82%. The S&P 500 fell 0.75%. Mellon drew particular attention since its directors are meeting today and may clarify the long-standing question of the company's future leadership.
Mr. Cahouet, 65, plans to leave at the end of this year, but Mellon has not named an heir apparent-a matter some industry observers feel helped derail its bid for CoreStates Financial Corp. last year, as well as its later talks with Bank of New York Co.
The three top contenders, according to various sources, are Martin M. McGuinn, 55, who heads retail banking; Steven G. Elliott, 51, the bank's chief financial officer; and Christopher M. Condron, 50, who heads Dreyfus Co. and Mellon's other investment management activities.
Other possible candidates are David R. Lovejoy, 49, who directs financial market activities and corporate development, and Keith P. Russell, 52, who leads West Coast operations.
Traders noted that the absence of a clear successor has worried some investors because it created uncertainties about Mellon's business strategy. At the same time, some market players assumed the company might be sold and saw it as a target.
Banking analyst Michael L. Mayo of Credit Suisse First Boston said some investors could "react negatively" if the company's succession issue is settled.
"If a successor is chosen, some investors may view Mellon as less of a takeover target," said Mr. Mayo. "Certainly, speculation runs higher when there is no clear successor." Thursday, Mellon shares fell 93.75 cents, to $58.4375, in line with the rest of the market.
Among other bank stocks, some of the biggest losers included Bankers Trust New York Corp., which fell $3.50, to $102.25; Citicorp, $1.25, to $117.75; and J.P. Morgan & Co., $1.4375, to $105.50.
Nevertheless, the day was not without its gainers. Zions Bancorp, Salt Lake City, jumped $2.1875, to $44.4375; Whitney Holding, New Orleans, $1, to $54.50; and BankAmerica Corp., 87.5 cents, to $68.9375.
"Banks looked like they were going to be up after bullish reports from Goldman Sachs and Salomon Smith Barney, but they clearly came under pressure," said one trader. "Lately, when people have been looking for quick cash, they have been turning to bank stocks."
Veteran bank analyst George M. Salem of Gerard Klauer Mattison & Co., said bank investors could be selling in advance of next week's earnings. "Earnings, so far, have looked pretty good," said Mr. Salem. "But the real action happens next week when the bigger guys, Chase, Citicorp, and others, report."
Investors continue to be concerned about the exposure of some larger banking companies to Southeast Asia, added the analyst.
"Next week, we actually find out," said Mr. Salem. "I'm actually holding my breath for Citicorp. The earnings might come in on target, but the quality of the earnings may be below par."