Attempting to shape its capital markets staff to suit its core middle- market customer base, NationsBank Corp. recently fired between 50 and 55 employees, many of them specialists in investment-grade securities.
The Charlotte-based bank had amassed nearly 1,000 people on its capital markets team to provide such products as high- yield and investment-grade bonds as well as mergers and acquisitions advice.
"We built up a lot of business lines, and when we looked at profits and revenues, we found that our revenues were not covering our costs," said William Maxwell, the president of NationsBanc Capital Markets.
Mr. Maxwell cautioned that the bank was not pulling out of its business lines, but rather cutting back on costs and targeting the more profitable parts of its franchise.
"When we looked hard at the upper end of the investment market, we found that the highest-rated companies did not produce big enough fees to be in that business in a big way," he said.
As a result, the capital markets team is targeting the lower-rated, middle-market companies.
Analysts said the move was a natural extension of the bank's recent $8.8 billion agreement to purchase St. Louis-based Boatmen's Bancshares.
"Boatmen's is giving NationsBank an opportunity to get back into what they now see as their core business - retail regional banking," said Nancy Bush, a bank analyst at Brown Brothers Harriman & Co.
"Even in a well-capitalized bank like NationsBank, they don't have the capital to deploy in supporting businesses that are tangential or peripheral," said William Youngstrom, a managing director and sales manager at SunTrust Capital Markets, who left NationsBank in March after more than 12 years there.
