CA - Bank of America Delays Computer System Rollout

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Posted: Monday, June 12, 2000 | 6:57 a.m.

Bank of America Delays Computer System Rollout

The San Francisco Chronicle

SAN FRANCISCO - Bank of America has indefinitely put on hold the rollout of its computer system in its 960 California branches, the second time it has delayed what is considered the trickiest part of the nation's biggest-ever bank takeover.

Bank officials said the postponement will allow it to spend money on programs that will attract new business instead of on takeover-related tasks, nearly two years after North Carolina's NationsBank bought San Francisco's B of A and took its name.

The officials sought to minimize the significance of the latest delay in updating California branch computers, insisting that customers wouldn't be hurt.

But analysts described it as an embarrassing setback that raises questions about B of A's ability to meet goals set at the time of the 1998 takeover.

"Investors expect the California conversion to take place," said Credit Suisse First Boston analyst Michael Mayo. "There must be more pressure to hold down expenses than previously had been expected."

Under Chairman and Chief Executive Hugh McColl, NationsBank built itself into the nation's largest bank by carrying out takeovers with military precision, following strict timetables in absorbing acquired institutions. Delays in California mark a break with tradition.

"In the past, we did one acquisition after another sticking to hard deadlines with strict discipline," said Tim Arnoult, the bank's executive for technology and operations. "We've changed strategy. It's the end of an era for the company."

Bank insiders confirmed that the latest delay reflects the eagerness of managers to hold down costs just as intense competition and rising interest rates are squeezing earnings. Switching over California computers will cost hundreds of millions of dollars. Those costs could jump higher because it is proving more difficult to combine the two computer systems than the bank originally estimated.

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-- (Dee360Degree@aol.com), June 12, 2000


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