NationsBank Will Set Up Institutional Asset Manager

NationsBank Corp. said Wednesday that it is forming a unit to manage $30 billion in mutual funds and institutional trusts. TradeStreet Investment Associates, the new unit, will be the engine for the banking company's drive to attract assets from corporations, the public sector, and other institutional clients, said James B. Sommers, president of NationsBank Trust and Investment Management. The company is slated to open for business in the first quarter of 1996 with 75 staff members. With $60 billion in client assets under management - about half of which are personal trusts and other accounts for individuals - Charlotte, N.C.- based NationsBank currently ranks among the top 25 U.S. money managers. With such a large pool of assets, Mr. Sommers said, NationsBank has concluded that the institutional business "requires a higher level of focus." Industry observers agreed. "Asset collection and management is the name of the game, and everyone is in it - commercial banks, mutual fund companies, and insurance companies," said Nancy Miller, a brokerage recruiter with Mark Elzweig Co., New York. Ms. Miller said the creation of a separate institutional money management unit can help a bank overcome a big obstacle to attracting top personnel - the perception that "banks are more bureaucratic, that they don't pay people well." "This move by NationsBank may signal that they are more serious about being in this business," Ms. Miller said. Money management has become a significant part of NationsBank's strategy, said Moshe Orenbuch, a banking analyst with Sanford C. Bernstein & Co., New York. In the first nine months of 1995, the company earned $336 million in fees from asset management, including corporate and personal trust, he said. Now NationsBank is "trying to bring focus to the asset management business by bringing everything under one unit and concentrating resources to grow the business." He added that the "fixed costs associated with it are already there. Now they're trying to get the profits out of it." TradeStreet Investment Associates will handle large institutional accounts with a minimum of $10 million in them, said Andrew M. Silton, who has been named president of the new company. The company will offer equity, fixed-income, and money market offerings for cash management, pension plans, and other purposes. Mr. Silton, currently director of investment strategy at NationsBank Trust and Investment Management, will report to Mr. Sommers and John Munce, the executive vice president and principal investment officer for NationsBank. Mr. Silton said he doesn't expect the unit to turn a profit until well into its first year of operations. "It's all about one thing: growth," said Mr. Silton. "The consolidation is not about saving money, this is one of the those things where the payoff will be in year one or in year two." Giving greater independence to a money management unit "can really send a positive signal to potential clients," said George C. Eshelman, executive vice president of Comerica Inc., Detroit, which recently spun off two money management arms to Munder Capital Management, Birmingham Hills, Mich. "NationsBank's move is a recognition that the investment management business is distinct from the trust business and commercial bank business as a whole," Mr. Eshelman said.