NationsBank Corp. bought Montgomery Securities for its equity prowess, but the acquisition is making NationsBank more junk-bond savvy as well.
One week after NationsBank closed its $1.2 billion deal for Montgomery, it began naming business heads for the newly minted NationsBank Montgomery Securities Inc. And its executives say they are ready to roar into Wall Street's businesses.
In high-yield, the deal brings together two nascent efforts, resulting in offices coast-to-coast. NationsBank began its capital markets business in 1993, and a high-yield unit two years later.
San Francisco-based Montgomery began its high-yield unit in 1993 also, and five months ago it announced the opening of a high-yield trading, sales, research, and bridge-lending office in New York.
"Montgomery gives us tremendous breadth of client coverage and product offerings, and I think we've established a good high-yield effort here," said NationsBank managing director Thomas White."Now, we have the capability to compete with the bulge-bracket firms," the major Wall Street investment banks, "and that's our objective."
Charlotte, N.C.-based NationsBank has led or been involved in 30 high- yield issues over the last 18 months and raised $15 billion in proceeds from those deals. Mr. White said that on a combined basis, NationsBank and Montgomery have the potential to double their high-yield revenues.
An alumnus of Morgan Stanley & Co. who joined NationsBank three years ago, Mr. White had been co-head of high-yield with William Sacher.
In the new organization, Mr. White will be the head of credit fixed- income sales, trading, and research for the high-yield, high-grade and emerging markets groups. He will also run the combined firm's capital markets and distressed debt efforts.
Mr. White will report to Jerry Markowitz, who was one of Montgomery's senior managing partners. Markowitz will head credit fixed-income. Mr. Sacher, and Andrew Coolley, head of high-grade credit origination, will report to Mr. Markowitz. At Montgomery, Mr. Markowitz headed high-yield.
Montgomery's Lisa Yeager, managing director and head of high-yield investment banking, will report to Mr. Sacher.
Mr. White said the sales and trading professionals will remain in New York and Charlotte, and origination will be done out of those cities and through the San Francisco office.
With the addition of Montgomery, NationsBank's high-yield research team, which was run by Ray Stotlemeyer, will swell from 13 to 22. Mr. Stotlemeyer will co-head research with Ned Zacher, who was Montgomery's head of research.
Thomas Weisel, who was Montgomery's chief executive, will be chairman of NationsBank Montgomery Securities Inc., and will report to NationsBank's chief financial officer, Jim Hance.
Ed Brown, president of global finance, which at the combined company includes corporate finance, syndications, global investment banking, risk management, and real estate, reports to Mr. Hance.
"We decided that this is a key part of NationsBank and Montgomery, and both needed a strong and bold effort in high-yield," Mr. White said.
Going forward, Mr. White said the company plans to add two salespeople and traders in the high-grade arena, and four new research people. Also on the to-do list is putting high-yield resources in London. One specialist is there now, and five are expected by January.
Montgomery brings expertise in technology, restaurants and leisure, and lodging to NationsBank's effort and complements its existing telecom practice. NationsBank brings to Montgomery a focus on energy and textiles.
"Both companies are very focused and don't have the intention to be all things to all people. But in our sectors, we intend to dominate in leveraged lending and high-yield finance," Mr. White said.
"It is always a challenge in any transition to create an integrated culture that preserves the best qualities of both firms. But we believe we are already very much alike," he said.
