Stocks Sullivan's Exit Stirs a Debate About Status of First Chicago

Barry Sullivan's surprise announcement last week that he would soon step down as chairman of First Chicago Corp. has left the investment community wondering what to expect.

"Without knowing the true nature of his departure, you can't say his leaving is good or bad," said James McCormick, president of Keefe, Bruyette & Woods Inc.

Some observers saw Mr. Sullivan's retirement as a sign that First Chicago's board might be further along than previously assumed in terms of taking the company in a new strategic direction.

It's Anyone's Guess

Whether that means a merger, or perhaps dumping the global bank, is anyone's guess right now, one analyst said privately.

Although Mr. Sullivan's early retirement was officially portrayed as his idea, a number of analysts are not so sure, in part because of the abrupt nature of the decision.

Some analysts speculated that First Chicago's board pressured Mr. Sullivan to resign because of the bank's lackluster performance under his leadership.

"The results are there. The job has not been done," said Michael Milunovich of Robert W. Baird & Co. in Milwaukee.

"Basically, he hasn't made any money for shareholders," added another analyst, who insisted on anonymity.

Some Expected Stock to Rise

Indeed, several analysts expressed surprise that First Chicago's share price didn't rise on the news that Mr. Sullivan plans to step down no later than next April.

The announcement came after the close of trading on the New York Stock Exchange on Wednesday. On Thursday, First Chicago's stock closed at $25.75, off 50 cents. The stock closed at $25.875, up up 12.5 cents, on Friday.

Other analysts, less critical of Mr. Sullivan's performance, doubt he was forced to resign.

"Sure the bank is not doing as well as it did a couple of years ago," when it was trading in the high 40s, "but that's the recession," said Raphael Soifer of Brown Brothers Harriman.

Others Aren't Faring Better

Besides, most other moneycenter banks are not doing so well, either, he said.

Bankers Trust New York Corp. and J.P. Morgan & Co. are the exceptions.

"I'm inclined to take Barry's retirement at face value," Mr. Soifer said.

Still, he was surprised by the announcement, and so was just about everyone else, both inside and outside First Chicago, who have been left to speculate whether there is some hidden reason for move.

Meanwhile, speculation continued late in the week on Mr. Sullivan's successor. Among the potential external candidates, attention focused initially on Thomas Johnson, who recently was forced out as president of Manufacturers Hanover Corp.

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