Private Banking: No Boatmen's Tag for Merged Bank's Trust Business

Though mergers are believed to benefit banking companies on the whole, they can cause identity crises for trust subsidiaries.

NationsBank Corp.'s pending acquisition of Boatmen's Bancshares is a case in point.

Three months ago, the Charlotte, N.C.-based superregional said it would retain the Boatmen's Trust name alongside NationsBank Trust. After all, Boatmen's Trust Co. has a sterling reputation as a premier asset manager and corporate trustee in 10 midwestern states.

This month, NationsBank did something of an about-face. It formally announced that the fiduciary business of the post-merger bank would operate under the NationsBank Trust name. Though NationsBank executives said they will not scrap the Boatmen's Trust moniker entirely, they admitted that they are unsure about what business it will represent in the future.

"We have not decided how Boatmen's Trust will function going forward, but there will still be a Boatmen's Trust," a NationsBank spokeswoman said.

"A lot of pieces of Boatmen's Trust will be realigned under the NationsBank name," she added, but said she could not yet say which ones.

Outsiders say it is unusual for NationsBank executives to be so indecisive. Shortly after announcing its agreement to buy Boatmen's in late August, NationsBank said all of the merged entity's retail and commercial banking units would assume the NationsBank name.

But even NationsBank's competitors admit that the deciding the fate of the Boatmen's Trust label is a difficult task. Due to its long-term nature, the trust business is steeped in history, stability, and a sense of permanence. A merger and an associated name change could easily jar clients' confidence.

Brand identity in trust is a "problem for all of us" as banking companies continue to merge, said Peter F. Mackie, executive vice president for investment management at Commerce Bank, a St. Louis neighbor of Boatmen's. His advice for NationsBank: "keep the (Boatmen's) name for five years and then blend it in so there is less disruption.

"Years from now NationsBank Trust will probably be a strong name around the country," he predicted. Boatmen's derived its own stellar reputation from a predecessor bank, St. Louis Union Trust Co., he added.

David Ross Palmer, a private banking consultant, concurred that the NationsBank name is likely to carry weight in the trust business going forward.

"There was some real value in Boatmen's' name, but there is greater value in calling it NationsBank if you're going nationwide," he said.

Upon completion of the Boatmen's merger, NationsBank Asset Management would have $111 billion in client assets in personal trust, managed accounts for individuals and institutions, 401(k) plans, and mutual funds. Based in St. Louis, it will be run by Owen G. "Bob" Shell Jr., the former head of NationsBank's Tennessee subsidiary.

This month, Mr. Shell said NationsBank Trust would be run by David W. Fisher, a longtime Nations executive. At the same time, Mr. Shell named the current head of Boatmen's Trust Co., Martin E. "Sandy" Galt, president of the portfolio management division of the merged bank's private client group.

In that capacity, Mr. Galt will oversee the management of $50 billion in private-client assets. Much of that business comes from NationsBank, which currently has $36 billion of assets from 35,000 private clients.

While Mr. Galt will retain his title as president of Boatmen's Trust Co., his role in the new bank's trust business remains unclear. The NationsBank spokeswoman acknowledged that Mr. Galt's duties have changed since an earlier announcement about the merged bank was made three months ago.

"It was official at the time. As we got further into the process we made some (other) decisions," she said. "We decided 'no, that's not a good idea, let's do it another way.'"

Boatmen's Trust Co. currently manages a total of $44 billion and consists of institutional and personal trust, a broker-dealer, mutual funds, and asset management. As a result of the NationsBank acquisition, Joe Gazzolli, head of personal trust, and Bill Ottinger, national sales manager, have resigned.

The assignment of John Morton to head the private-client group at the merged bank remains in effect. Mr. Morton, currently president of Boatmen's St. Louis bank, is to focus on credit. John Munce will continue to oversee institutional asset management - TradeStreet Associates Inc. and Nations Funds - out of Charlotte.

Barring Coughlin, who oversees the group of NationsBank portfolio managers dedicated to private clients, will report to Mr. Galt. That group was dubbed Tryon Investments in August, shortly before the Boatmen's deal was announced. The NationsBank spokeswoman said that whether that moniker will be retained is now "under review."

In the meantime, outsiders say NationsBank executives are smart to think twice before pushing aside the Boatmen's Trust label.

"In that part of the country, Boatmen's is a much better name that NationsBank," said Jeb Britton 3d, a senior investment management consultant at the Spectrem Group, based in San Francisco. "They don't want to have a brand problem."

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