Taking a page out of the investment bankers' book, BankAmerica Corp. is intensifying its corporate finance focus on several industry-specialized groups.
The bank plans to structure more of its corporate client calling efforts around industry sectors, in addition to its traditional geographic and product focus. BankAmerica expects the realignment to increase the percentage of corporate finance revenues generated from industry specific groups to 75% from the current 55%.
The bank is also planning to hire a number of executives as it formalizes three new industry groups, and plans to start four others by July.
"We've enjoyed a great amount of success among the industry segments we currently have," said a BankAmerica spokesperson. The bank already focuses on leasing and transportation, energy, high-technology, insurance, media and entertainment, and health care. "This increased industry focus underscores that strategy."
The San-Francisco based behemoth is the latest commercial bank to adapt an organizational structure that focuses on in-depth knowledge of customers in specific industry sectors.
"You can't be focused around products or you get picked off," said Joseph P. Rizzi, a managing director in structured finance at ABN Amro. "The industry is focusing around the customer."
Bankers said the trend toward industry specialization at commercial banks reflects banks' interest in assuming advisory-style relationship with their clients.
"Look at the investment banks," said a commercial banker. "That's the way they cover their corporate clientele. As banks look to step up in the advisory race, they need to increase their expertise."
Additionally, bankers said the competitive marketplace rewards those institutions that can provide the most in-depth and insightful service through specific knowledge. Corporate customers faced with a diverse mix of providers often choose the banks with the execution ability and the most in-depth understanding of a particular business, bankers said.
"Banks want to put the highest value-added individual in front of the client that they can," said Michael Zupon, a managing director in NationsBank Corp.'s leveraged finance group. "An industry focus can help in creating that added value."
To be sure, an industry-specific approach is not new to banks. Indeed, a plethora of commercial banks have been focusing on media lending for years. Now, however, banks are dedicating much more resources to increasingly diverse fields, including health care, telecommunications, and retail.
"Further specialization within industries has driven specialization in banking," said John P. Rogan, an executive recruiter at Russell Reynolds Associates in New York.
Mr. Rogan said that improvements in technology in the media sector, for example, have enhanced specialization from the original collection of broadcasters to a new breed of wireless, cellular, and paging companies.
"A lot of banks are realizing that they aren't making as much money on their accounts as they'd like," said a lender at a large commercial bank. "They wonder how they can get a larger share of the business by providing additional service."
Some bankers said they were surprised that BankAmerica did not develop more targeted corporate finance groups sooner.
"BankAmerica is following other money-center banks," said a lender at a large regional bank. "There are even some regionals who have done it."
A BankAmerica spokeswoman said that the bank has had an industry focus for many years, but that the difference is that the categories are both broader and more numerous than those of its regional counterparts.
"They may just not notice them as industry segments per se," she said.
