Stocks: DLJ's Investment Bank Analyst to Cover Morgan, BT

A major brokerage firm has transferred responsibility for coverage of the stock of J.P. Morgan & Co. and Bankers Trust New York Corp. to its investment banking analyst.

In a broad reorganizaton following the promotion of money-center bank analyst Frank DeSantis, Donaldson, Lufkin & Jenrette has assigned Joan Solotar to cover the two banks, whose investment banking focuses have increasingly distinguished them from their peers.

In addition, the firm will cease to draw a distinction between money- center and regional banks, assigning coverage of all 46 banks it follows to analyst Thomas K. Brown and his associates.

Some nonbank credit card specialists previously covered by Mr. Brown have been assigned to Susan Roth, who joined the firm from Bear, Stearns & Co. last year.

The changes underscore a convergence of investment and commercial banking, and the fading distinction between regional and money-center banking.

Observers applauded the logic of Donaldson's move.

"You can really leverage your knowledge base this way," said Felice Gelman of Keefe Managers Inc. "Its been puzzling to think that you could compare J.P. Morgan & Co. and Bankers Trust with banks like BankAmerica or First Chicago on an industry basis."

Investment banks typically trade at a lower multiple of earnings than commercial banks. J.P. Morgan and Bankers Trust have chosen to emphasize investment banking as a way to build relationships with corporate customers.

Analyst Raphael Soifer of Brown Brothers Harriman & Co. added that "companies are competing for business almost regardless of where they began, and that competition is only going to increase."

Brown Brothers made a similar move in April when it removed the barriers between its commercial and investment banking coverage and integrated its financial institutions coverage under a single, "global investment banking" label.

"More generally the business of banking is measuring, pricing, and managing risk. What difference does it make if a bank is dealing with traditional bank lending, sub debt, or equity?" said Michael Mayo of Lehman Brothers.

"Distinctions between money center and regional banks have blurred, and the differentiation between all banks as one group has risen significantly," Mr. Brown said in a "Banknotes" report.

"More and more, bank analysis has more to do with the trends of individual companies rather than broader groups such as money-centers and regionals," the report continued.

"In terms of the money-centers and regionals, as the industry restructures itself, the possibilities for several different kinds of classification arise," said Mr. Mayo.

Labeling their businesses has become a challenge for the banks themselves.

A spokesman for Bankers Trust said that "though we're still a commercial bank, a big portion of our earnings come from investment banking revenues."

J.P. Morgan defines itself as "a wholesale financial services institution providing investment, commercial, and merchant banking services," a spokesman said.

NationsBank, meanwhile, has outgrown its "regional" bank status. "We are a multiregional bank that offers many financial services nationwide," a spokeswoman said.

In trading Friday, the S&P bank index fell tk% on news that unemployment remained low, raising the possibility that the Federal Reserve may hike rates to control inflation.

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