The dumping of Vincent C. Burke Jr. as chief executive officer of Riggs National Bank two weeks ago stunned Washington's business community, but it should not have come as a surprise.
In fact, the decision by directors to replace Burke foreshadows several changes that had been anticipated for some time. And with Burke out as chief executive officer, other senior officers are understandably nervous about their futures.
The District's biggest bank -- highly respected and successful, though rigidly conservative -- had seemed immune to bloodletting in the boardroom until its new chief executive and principal stockholder, Joe L. Allbritton, took control last year.
With Allbritton apparently deciding to chart a new course for the $3.6 billion institution, speculation runs high about its apparent problems and future.
It was only a matter of time before Allbritton, who is chairman of the bank's holding company, Riggs National Corp., replaced Burke as CEO. Persons familiar with Allbritton's handling of his numerous business interests anticipated that he would eventually run Riggs.
Thus, while the timing was never certain, it was a foregone conclusion that Allbritton would take over as chief executive.
Many observers and business associates of Burke appear to be more perplexed by what was omitted in the board's bland announcement than anything else.
The board's action does raise some serious questions about what is taking place. After all, the nucleus of Riggs' board is the epitome of Washington's old-boy network of business leaders. Many directors, including Burke, sit on the same boards, belong to the same clubs and do business with each other. What's more, Riggs' directors approved Burke's recommendation last year to file legal action in an attempt to block Allbritton's eventual takeover.
As yet, no Riggs director has resigned in protest over Burke's loss of power. "Knowing these guys, they don't generally treat this kind of situation lightly," commented the head of a Washington firm.
"It clearly came as a shock to the whole business community -- just the crudeness of the way it was done," said another, referring to the board's decision to assign Burke to limbo as chairman of the board, largely a ceremonial role. "It looks like a bomb is coming. Otherwise, it doesn't make sense."
After buying more than 750,000 shares of Riggs' stock last year, Allbritton volunteered that he was satisfied with the bank's management and he gave no indication that he would replace Burke or anyone else.
"This is a first-class operation," he told Riggs stockholders in April 1981. "It's a first-class bank."
Indeed, shareholders at that meeting unanimously approved a motion by Allbritton commending management for the bank's performance in the previous year. That display of magnanimity and unity sharply contrasted the bitter fight that had been waged between Riggs and Allbritton a month earlier.
But Burke, perhaps more than anybody else, should have known that his days as CEO were numbered. In a sworn statement last year, Burke's hyperbolic references to Allbritton provided a clue to his misgivings.
"Mr. Allbritton must wear out a pair of tennis shoes at least once a day, if not more," Burke told an attorney for Allbritton.
When pressed to explain his references to tennis shoes, Burke replied: "Joe changes his mind . . . . A man's got a right to . . . . Joe Allbritton obviously either changes his mind a great deal or doesn't--and he has no obligation to--he doesn't communicate his basic thoughts, certainly to me . . . . "
Earlier, Burke had beamed: "Mr. Allbritton has constantly said to me that he admires and respects me fully and completely as a man, as a citizen and most of all as a banker."
What's more, Burke recalled, Allbritton told him he wouldn't consider buying any stock in Riggs "if Vincent C. Burke Jr. would not be the chairman and chief executive officer."
What, then, has caused Allbritton to change his mind about the man he admired and respected as a banker?
Riggs' performance in recent months apparently has caused considerable concern for Allbritton the investor. The holding company reported a decline of nearly 3 percent in second-quarter net income, attributing the results to a large increase in problem loans.
At the same time, the price of Riggs' stock has fallen considerably since the beginning of the year, weakening Allbritton's investment of more than $70 million. Although stockholders approved a two-for-one stock split last year, Riggs' stock fell to as low as $19 last month.
When Allbriton exercised an option to buy 386,000 Riggs shares in February 1981, the stock was selling at close to $50. When he acquired more than 750,000 in a cash tender offer later, the price was close to $60.
Ironically, problem loans, declining profits and lower stock prices began plaguing Riggs after Allbritton gained control and took over as chairman of the holding company. Now the problems are his to solve.