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First Bank Chairman, Long A Survivor, Is First Interstate’s White Knight

November 6, 1995 GMT

MINNEAPOLIS (AP) _ John Grundhofer has been shot at, kidnapped and held for ransom.

But the 56-year-old Los Angeles native isn’t a cop or secret agent. Grundhofer, chairman of Minneapolis’ First Bank System Inc., is a banker who’s seen more rough and tumble games than most corporate chieftains.

Grundhofer’s latest splash _ a white knight offer to acquire First Interstate Bancorp. for $10.3 billion _ would put him at the helm of the nation’s ninth-largest banking company.

If the deal goes through, the merged entity _ to be called First Interstate _ would have $92.4 billion in assets and 1,514 offices in 21 states.

First Interstate’s board, fleeing from a hostile bid from Wells Fargo & Co., on Monday accepted the offer from Grundhofer, a former Wells Fargo executive. The merger is subject to shareholder and regulatory approvals.

The deal would be something of a homecoming for Grundhofer, a native Californian.

``I still have a lot of friends there,″ said Grundhofer in a teleconference with reporters. ``It’s a market I know well.″

He started his career at Union Bank in San Francisco. During his stint, Grundhofer was shot at as he tried to repossess a debtor’s car.

He later joined Wells Fargo, a bank known for savvy management. The bank engineered a takeover of Crocker National Bank, one of the biggest bank mergers of its day. Grundhofer was named vice chairman of San Francisco-based Wells in 1986.

He left Wells to take over as chairman of First Bank Systems, the second-largest bank in Minnesota. Within months, Grundhofer engineered a restructuring and slashed thousands of jobs.

His career then took a dark turn. In 1990, Grundhofer was kidnapped from a downtown Minneapolis parking lot by a nattily dressed man authorities never found. He was bound, stuffed in a sleeping bag and left in a remote wooded area in Wisconsin.

An unharmed Grundhofer escaped two hours after he was taken. He ran to a nearby dairy farm and called for help. The armed man had forced the banker to make a ransom request, but it was never paid. No one was ever charged with the kidnapping.

Grundhofer has earned analysts’ respect as a ruthless cost-cutter. First Bank Systems is one of the most efficient banks in the country.

Grundhofer has promised to cut $500 million in expenses after the merger. Though First Interstate is a much larger institution than the one he’s used to running, few doubt he’s up to the challenge.

``He’s run (the bank) like a factory,″ said David Berry, head of research at Keefe, Bruyette & Woods, Inc., a New York research and investment banking firm.