DATE: Wednesday, September 3, 1997          TAG: 9709030422

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY NIKHIL DEOGUN AND MARTHA BRANNIGAN, THE WALL STREET JOURNAL

                                            LENGTH:  115 lines

BAD BOY OF BANKING TURNS TO COAXING NATIONSBANK'S MCCOLL TOUGH IN ACQUISITIONS

Hugh L. McColl, the 62-year-old chief executive of NationsBank Corp., has long been known for his hard-charging - some would say downright rude - assaults on his acquisition targets.

But this time, with the proposed $14.6 billion acquisition of Barnett Banks Inc., the bad boy of banking is acting more like Mr. Manners.

To clinch this deal, colleagues and observers say, he focused on coaxing rather than forcing, talking persuasively about the benefits of combination.

``I couldn't have dealt with a more soft-spoken and impeccable gentleman,'' says Charles E. Rice, Barnett's chairman and chief executive. Agrees Frederick H. Schultz, a longtime Barnett director and former vice chairman of board of governors of the Federal Reserve System: ``I've known Hugh a long time. There's no question he's more polished than before.''

No one, of course, is arguing that McColl has gone soft. Indeed, those close to these negotiations say McColl was unswerving in his desire to ``take out'' the competition, and to win this deal at all costs. He quickly hired Merrill Lynch & Co. and Goldman Sachs & Co., both for advice and to keep them from working for competitors interested in Barnett. And NationsBank is still considered the most aggressive acquirer in banking, with a staff of professionals constantly crunching numbers on banks across the country.

Still, investment bankers, rivals and colleagues say McColl's more diplomatic demeanor reflects a growing deal-making sophistication as the size and importance of his targets grows. Bagging big prey like Barnett requires deep pockets as well as an ability to master the art of the soft sell. Moreover, McColl paid handsomely for Barnett, and conferred the chairman's title on Rice.

``Hugh has learned the trade of buying banks - he looks for the other person's point of view,'' says Thomas Storrs, McColl's ex-boss who retired in 1983 as chairman and chief executive of NationsBank, then known as NCNB Corp.

McColl himself attributes his demeanor to salesmanship. ``I've been a successful salesman for a long, long period of time. So I've always been willing to make concessions on things to make something happen.''

Since taking over as chairman and chief executive in 1983, McColl has roiled the courtly world of Southern banking, often using military metaphors and aggressive demeanor as he tries to transform NationsBank into a truly national bank. (One of NationsBank's most coveted internal awards is a crystal hand grenade, an allusion to the real one McColl, an ex-Marine, kept on his desk for years.)

In 1981, he dubbed the company's first foray into Florida ``Operation Overlord,'' after the Normandy invasion. In 1985, Thomas R. Williams, First Atlanta Corp.'s genteel chairman, rebuffed McColl's takeover proposal, saying: ``Hugh, you're not being very friendly.'' McColl's response: ``I am being friendly, damn it.'' First Atlanta merged instead with Wachovia Corp. - for a lower price.

In 1989, McColl told Bennett Brown, then CEO of Atlanta's Citizens & Southern Corp., another takeover target: ``You have three hours to answer, or I will launch my missiles.'' (Brown fled, with his company, to soon merge with Sovran Corp., forming C&S/Sovran Corp.)

Investment bankers quip that McColl has spurred far more deals with other people than he's done himself - by prompting bank executives to run into each other's arms to avoid his grasp. A survey of 1,500 bank CEOs, published last year in Bank Director magazine, ranked NationsBank as the No. 1 acquirer to avoid.

But after dozens of acquisitions, McColl appears to have recast himself as a deal-making diplomat. By many accounts, the transformation began back in 1991. When, after his earlier failed 1989 bid for Citizens & Southern, he launched a bid for C&S/Sovran, McColl had top aides prepare psychological profiles not only of Brown, who had become chairman of the merged company, but also of himself. Aides bluntly told him he was being too militaristic, and not mindful enough of the power and stature of his opponents.

One change resulted: He asked Brown to become chairman of the company after the acquisition was successful. Later, he offered the same post to Andrew Craig, the chairman of Boatmen's Bancshares Inc., which was acquired last year. Likewise, he says, he offered Rice the chairman's post without Rice's prompting.

``It's a very good way to give the institution the respect it deserves,'' says James H. Hance Jr., NationsBank's vice chairman and chief financial officer.

McColl also offered to have Rice's heir-apparent, Allen Lastinger, head the combined Florida operations of the two banks. He's also proposed adding five Barnett directors to NationsBank's board and moving his company's Florida headquarters from Tampa to Barnett's hometown of Jacksonville.

Also in McColl's corner these days is NationsBank's vast experience with acquisitions. For years, McColl's strategy of interstate banking via mergers and acquisitions was treated skeptically by fellow bankers who expected the NationsBank CEO's deals to backfire. Instead, he has proved many rivals wrong, adroitly stitching together a vast empire across 16 states. His stock price, which once traded at a steep discount to his peers, has also performed well, making it easier for him to do stock-swap transactions.

One symbol of McColl's ambition: In 1995, at the age of 60, he climbed Kilimanjaro, the highest mountain in Africa, and lugged a NationsBank flag to the summit, planting it there.

What's next for McColl? He has made no secret of his desire to go for the coast. Merger talks with BankAmerica Corp., the California banking giant, fell apart two years ago. Last year, following the purchase of St. Louis-based Boatmen's, McColl joked that St. Louis was that much closer to California and is the gateway to the West. This year, many noted with interest that when NationsBank recently bought an investment bank, it was in California.

This weekend, McColl reiterated his interests in expanding into California, although he declined to name specific targets. He also said the bank would have a long job to do to digest Barnett.

``We can't possibly be interested in anybody right now,'' he said. ``We've got a job to do to make this (Barnett) merger happen and pay off.''

Still, analysts and observers noted that NationsBank has been making its moves in one-year intervals. The Barnett offer is NationsBank's third-straight major acquisition to be announced around Labor Day weekend. Two years ago, the bank acquired Bank South in a $1.59 billion transaction. Last year, it was Boatmen's.

``Hugh must have some relatives he doesn't want to see,'' quips Thomas Brown, a Donaldson Lufkin & Jenrette bank analyst. ``You clearly don't want to go away from NationsBank around Labor Day.'' ILLUSTRATION: [Color Photo]

Staff/file photo

Hugh McColl

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