The joke about Unionbancal Corp. is that it has become Noah's Ark.

But the bank, which has assiduously protected senior executives in overlapping roles ever since its April 1 merger of equals, is about to lose its first high-level official.

On July 1, William R. Sweet, executive vice president of corporate and real estate banking, plans to retire at the age of 59. His duties are to be assumed by vice chairman Robert M. Walker, 54, who also oversees middle- market and specialized lending.

Well-placed sources said the move should stabilize a potentially volatile political situation. It could also set the stage for other streamlining moves in executive management.

"This thing with (Mr.) Sweet may be the first example of more fallout to come," said Randall Hill, an executive recruiter in Los Angeles with Heidrick & Struggles.

San Francisco-based Unionbancal, created by the combination of Union Bank and Bank of California, is an American bank going through a Japanese- style merger integration. The California banks' Japanese parents, Bank of Tokyo and Mitsubishi Bank Ltd., also combined on April 1.

Japanese banks are noted for not shedding much staff or expenses in mergers, and the Bank of Tokyo Mitsubishi Ltd. combination appears to be no exception.

Cost-cutting at $27.5 billion-asset Unionbancal is expected to fall somewhere between the American and Japanese models. Three-year targets have been set that are close to the norm for American banks. But the pace of cost cutting is slower than in most American bank mergers, and layoffs will be almost entirely avoided.

The most obvious instance of Japanese-style gentleness is in the executive suite, where both partners' entire senior executive teams have been retained.

In some instances, executive assignments were changed to give one official clear control of a business line.

For example, Union Bank retail head Richard Hartnack was given a similar position at the combined bank, while his counterpart at Bank of California, Roy Henderson, was moved to trust and investments.

But in wholesale banking, finance, and credit review, no clear leaders were chosen, sources said. Instead, responsibilities were divided between executives from the two banks.

Some insiders have maintained this division is creating friction and political wrangling that has the potential to hamper the bank's performance, and is hurting staff morale.

One area of particular concern is the wholesale bank. Mr. Walker was highly regarded for his stewardship of Union Bank's wholesale operations before the merger, and has solid credentials from previous work at Valley National Bank in Arizona and Wells Fargo Bank.

Sources inside and outside Union said they were concerned that Mr. Walker might leave in frustration at having his world divided with Mr. Sweet, who was the wholesale banking head at Bank of California.

"Bob Walker is a very strong banker with a very impressive background, and he's also a strong personality," Mr. Hill said. "And in looking at the way this thing was shaping up, it was pretty clear to me that Bob was not getting the scope of responsibility a guy at his level should have."

"Those of us who leaned toward Walker were afraid that he might blow up," added another recruiter, who asked not to be named.

Neither Mr. Walker nor Mr. Sweet returned calls seeking comment. A Unionbancal spokeswoman also declined to comment.

But now that Mr. Walker has been given clear control over all of wholesale banking, there is a good chance that similar moves soon will clarify lines of responsibility in credit review and finance, sources said.

"I am more optimistic now that progress is being made," said a high- level company insider who asked not to be named.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.