SAN FRANCISCO - Edward J. Brown 3d should know better than anyone the challenges facing Bank of America Corp. in its goal of pushing its investment banking unit to the same level as its top-tier commercial bank.
Now, as Mr. Brown prepares to take charge of the company's global corporate and investment banking operation his job will be to show that Bank of America's approach can yield the promised results.
"It's just a matter of figuring how to differentiate ourselves from the competition," Mr. Brown said in an interview. "We need to continue to accelerate our progress, especially in equity and mergers and acquisition advisory, but we aren't de-emphasizing debt capital markets."
Mr. Brown, whose background includes work in commercial banking at NationsBank, is to succeed Michael Murray, who announced his retirement Wednesday. The change seemed all but guaranteed when Mr. Brown, 52, was named deputy to Mr. Murray this year, and when executives including Carter McClelland, who runs client relationship activities, started reporting to Mr. Brown instead of Mr. Murray.
Mr. Murray, 56, said he would retire July 31, after 18 months of leading the combined corporate and investment bank. Known as a strategic thinker rather than a hands-on manager, he joined the old BankAmerica Corp. when it bought Chicago's Continental Bank, and was the last senior banker from BankAmerica to have a top position at the company since its 1998 merger with NationsBank.
With Mr. Murray, Mr. Brown has been closely involved in the bank's strategy of building its investment bank on the foundation of a commercial lender. The two men have been viewed as instrumental in melding the combined Bank of America's vast traditional banking and debt capital markets group to the former NationsBank's Montgomery Securities' equities and advisory businesses.
Unlike some of its competitors, Bank of America has taken a top-down, all-inclusive approach in integrating its traditional bank workforce, capital markets professionals, and the investment bankers it hired from the outside.
One notable change was the decision to eliminate the title "investment banker" in favor of the more generic "banker" that applied to a person trying to win lending mandates or advisory work.
Many of the firm's investment bankers felt the title change was a disaster. They said it created confusion about who was leading a deal or project and that it prompted some teams to leave.
Bank of America recognized that it could build its equities business by leveraging Montgomery Securities' industries strengths: technology and other emerging sectors. So it began widening the platform, asking its sales force to include sectors that corresponded more neatly with the bank's corporate lending clientele, many of which are larger, industrial, or more mature industries.
The cultural issues that arose from such changes persist, and Mr. Brown will have to deal with them.
"Investment banking is all about high-level relationship managers, and commercial bankers sell product," said a former Banc of America Securities employee who asked not to be named. "It's a completely different training, and in a very competitive environment, investment bankers can be hired everywhere."
In an earlier interview, Mr. Murray admitted to the difficulties bringing together the commercial and investment bank. "There are egos involved" in sorting out lines of communication, he said. "I would discourage all companies from trying this at home."
Still, much of the initial animosity between the former Montgomery staffers and the new bank of America management has cooled down. (The rumor mill says that at one point the tension was so thick, Mr. Brown was never seen to go into the TransAmerica Pyramid, Montgomery's head office.)
But the bank has been unable to stop runoff from the original San Francisco equities franchise - the product line it is now seriously looking to expand. In one of the more recent blows, a seven-member investment banking team, focused on the semiconductor industry and led by the banker Rex Sherry and the analyst Brett Hodess, left to join Merrill Lynch.
Those hires helped Merrill wrest from Bank of America the management of Entegris' initial public offering. It resubmitted the semiconductor equipment maker's IPO filing this month.
