Baltimore Bancorp using intimidation, T. Rowe Price says Shareholders being harassed over takeover bid, Fed is told

October 09, 1990|By Peter H. Frank

In the latest installment of the lingering feud between Baltimore Bancorp and its largest shareholder, T. Rowe Price Associates Inc. has claimed that the bank is resorting to "harassment" as a means to "intimidate" certain shareholders.

The allegation, made in a letter to the Federal Reserve Board, continued a running war of words between the two Baltimore financial institutions over their respective stakes in a rejected and all-but-forgotten $17-a-share takeover offer for Baltimore Bancorp made in late April.

Baltimore Bancorp, which owns the Bank of Baltimore, repeatedly rejected the unsolicited bid from First Maryland Bancorp as not in the best interest of shareholders.

However, T. Rowe Price, which controls 9.4 percent of Baltimore Bancorp's 12.75 million common shares, and some other stockholders criticized the banking company for not negotiating with First Maryland in an effort to either accept or increase the bid.

The latest volley, this time from T. Rowe Price, came in response to a Baltimore Bancorp request last month that the Fed investigate whether T. Rowe Price, an investment management firm, was illegally exerting a controlling influence over the banking company by dropping its status as a purely passive investor.

In its letter to the Fed, T. Rowe Price said Baltimore Bancorp's allegations had "no legal or factual basis" and that the banking company's previous letter was simply an attempt to quiet stockholders who had questioned the company's rejection of the takeover bid by using "the threat of [Federal Reserve] Board action against its shareholders."

The letter from Baltimore Bancorp to the Fed "is nothing more than an attempt to intimidate Price and other Baltimore Bancorp shareholders who may question the rejection by Baltimore of an acquisition proposal by First Maryland Bancorp at a substantial premium above market," T. Rowe Price said in its own defense.

"We believe that the Board should forcefully reject Baltimore Bancorp's effort to misuse the federal banking laws to inhibit the legitimate rights of shareholders to express their views to management concerning matters vital to their interest," the letter said.

"The current condition of the bank and thrift industries clearly suggests the need for greater -- rather than less -- vigilance and involvement by the shareholders of such financial institutions. Shareholders should be encouraged to question and, if necessary, oppose management without fear of harassment by spurious charges of banking law violations."

Baltimore Bancorp, which had been trading at slightly more than $10 a share before the takeover announcement, closed yesterday at $8 a share, down 12.5 cents on the New York Stock Exchange.

Baltimore Bancorp executives could not be reached for comment yesterday. Most banking companies were closed for Columbus Day.

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