It was four years ago this week that Financial General Bankshares Inc. discovered a substantial number of shares had been bought without its knowledge by unknown investors.
Fearing the worst, Financial General's management sounded the alarm that the multibank holding company was the target of a takeover attempt.
Several days later, the Washington-based company filed a lawsuit to thwart a takeover by a foreign investor group, triggering one of the longest corporate takeover fights on record.
The decision badly split directors of the company but succeeded in identifying the principal investors as a group of wealthy Middle Easterners.
After four years and untold millions of dollars in legal expenses incurred on both sides, the Middle East investors are continuing their relentless drive for control of the $2.6-billion bank holding company.
Financial General relented almost two years ago and agreed to elect three representatives--all prominent Americans--of the Middle Eastern group to its board. That was followed by Financial General's agreement to drop legal action against the investors.
When the current year began, only one barrier remained. But that last roadblock forced the investors to seek an extension of a deadline to make a formal tender offer for Financial General. They succeeded in obtaining a Sept. 30, 1982 deadline, the latest of several that have been granted.
The investors are bound by a consent decree to sell their 20 percent ownership of Financial General unless they can initiate a successful tender offer within a specified period.
The acquistion would be made by FGB Holding Corp., a Virginia corporation set up for that purpose; Credit and Commerce American Holdings N.V., a Netherlands Antilles corporation; and Credit and Commerce American Investment B.V., a Netherlands corporation.
Although the investor group has Federal Reserve Board approval to form a holding company that would acquire Financial General, New York's state banking board late last year slammed the door on the Middle Easterners' advance.
Two of Financial General's 12 affiliate banks are New York state-chartered institutions. Although New York banking commissioner Muriel Siebert and her staff supported acquisition of those banks (Bank of Commerce in New York City and Community State Bank in Albany) by the Middle Easterners, the state banking board refused to go along.
However, based on events of recent days, the investors headed by Sheikh Kamal Adham of Saudi Arabia may be well on their way to meeting the September deadline.
The investors have filed an amended application that, in effect, could foil opposition on the banking board.
The supplemental application is based on an agreement reached between the investor group and certain directors of Bank of Commerce.
Depositors in that bank are said to have objected to a takeover and pressured directors and state officials to oppose it.
Under the agreement, certain directors--acting as individuals--will form a group to purchase Financial General's 67 percent share in Bank of Commerce if the New York banking board approves the new application to acquire the bank.
The agreement further provides for approval by the banking board of an application by the Middle Eastern group to establish a branch of the Albany bank in Manhattan.
That is as much a key in the compromise as anything because it would give the new owners of the Albany bank access to the lucrative New York City market, an original goal in the bid for Financial General.
Except for metropolitan Washington where Financial General operates the three First American Banks, it has no holdings in other big markets.
Robert A. Altman, whose Washington law firm represents Adham's group, thinks the supplemental application will be approved by New York banking authorities. "It satisfies all banking regulations for approval," he said.
The 13-member banking board split 5-5 when one member abstained and two failed to show up for the previous vote. Those who opposed the application made no secret of the fact they didn't think that Arabs should invest in U.S. banks.
New York banking sources say they don't believe there is as much concern by board members about the acquisition of the Albany bank as there is about Bank of Commerce.
Thus, the agreement appears to be the type of compromise that was necessary to clear the way for the Middle East group.
"They could nationalize those New York banks and take jurisdiction out of New York," observed the executive of a bank holding company. But, he added, "this is faster. To nationalize them would take longer.