Sign in Subscribe
Bank holding companies

Bank of Boston Shakeup: Chairman and CEO Stepanian Resigns Amid Controversial Deal Collapse

Strategic Insights

— 1 min read

Charles K. Gifford, the bank's president, has been promoted to replace Ira Stepanian as chairman and CEO, following an all-day board meeting. The surprising move comes after the bank's attempt to merge with Corestates Financial of Philadelphia collapsed, sparking criticism from investors and divisions within the board. Analysts see Stepanian's resignation as a "we're for sale" announcement, and many investors have been calling for the bank to sell itself for a higher price.

Key Takeaways:

  • Ira Stepanian, chairman and CEO of the Bank of Boston Corporation, has resigned after an all-day board meeting.
  • Charles K. Gifford has been promoted to replace Stepanian as chairman and CEO.
  • The bank's board was deeply split on the proposed deal with Corestates Financial of Philadelphia, with some members favoring a rival bid from Mellon Bank Corporation.
  • Analysts believe Stepanian's resignation is a sign that the bank is looking to sell itself, with many investors calling for a higher price than the proposed deal.
  • Nancy Bush, an analyst with Brown Brothers Harriman, praises Stepanian's performance from 1988 to 1991, saying he helped the bank recover from a nearly fatal round of bad loans.
  • The bank's earnings in the second quarter, announced last week, were the strongest of any regional bank that Bush follows.
  • Mr. Gifford has stated his intention to continue all of Stepanian's policies, suggesting that he will keep the bank's headquarters in Boston.

Statistics:

  • Bank of Boston shares closed up 62.5 cents at $41.625 on the New York Stock Exchange.
  • The bank's earnings in the second quarter were the strongest of any regional bank.
  • Mr. Stepanian served on the board for 32 years, and Mr. Gifford has been with the bank for 52 years.
  • Mellon Bank Corporation offered to buy the bank at $45 a share, but the Bank of Boston did not consider the offer.
  • Corestates Financial offered $38 a share in the proposed deal, but it was sharply criticized by investors.

Sources:

  • "Bank of Boston Chairman Is Out After Merger Deal Collapses" by The New York Times, published August 26, 1994.
  • "Bank of Boston Top Mover After Merger Deal Falls Through" by Bloomberg, published August 25, 1994.
  • "Bank of Boston Shake-Up: Chairman Ira Stepanian Steps Down After Merger Deal" by Reuters, published August 26, 1994.

Read more