LOS ANGELES -- At least eight large customers have defected from a processing unit of Security Pacific since its takeover by BankAmerica Corp.

Some of the clients say privately that they left because BankAmerica does not seem committed to the clearing of government securities.

Among those departing are several leading primary dealers of government securities, including Chase Manhattan Bank, Kidder, Peabody & Co., Merrill

Lynch & Co., and PaineWebber,

V according to industry sources.

All of the defectors have switched to processing units of Bank of New York Co. or Chemical Banking Corp., the two other major players in the processing of government securities.

Some industry analysts say the Security Pacific unit, called Sequor, may have lost as much as half of its market value since the acquisition three months ago.

They say the unit originally might have fetched several hundred million dollars.

A BankAmerica spokesman declined to comment on the Secor unit.

BankAmerica has previously said it was committed to Sequor, which provides many services.

But government securities customers say they became concerned when some of the unit's top executives starting jumping ship -- most to Bank of New York -- shortly after the merger.

Change in Focus Seen

Other institutions that have reportedly left Sequor include Dean Witter Group and Prudential Securities Inc. Officials of Greenwich Capital Markets Inc. and First Chicago Capital Corp., a unit of First Chicago Corp., also confirmed their companies had moved the business.

An executive at First Chicago, who asked not to be named, said he expected Sequor to focus now on providing more-profitable clearing and global-custody services for medium-size and small institutions, rather than for large trading banks and others.

"There's evidence that B of A as a parent has facilitated a change in direction for Sequor's business," said the Chicago executive. "This suggested to us they will emphasize other parts of that business."

Mixed Messages

Other observers said that, while the quality of Sequor's services remains high, BankAmerica is sending mixed messages to customers in areas where it had not been active before the merger.

Customers left "because of the change in ownership," said Campbell Chaney, a banking analyst with Sutro & Co., San Francisco. "Initially there was a defection of executives, then a loss of customers. And B of A keeps reassessing what its strategic businesses are."

The customer losses at Sequor do not reflect on BankAmerica's retail banking strengths, sources said.

A Practical Approach

In not aggressively pursuing the securities clearing business, BankAmerica may simply be acting pragmatically.

The business is profitable for the few players in it, but profit margins are thin and banks have to worry about the risks inherent in the sizable "daylight over-draft" that occur when customers transfer out more money than is in their deposit accounts.

"The institutional fee-based services have a different set of risks than a retail bank deals with," said Thomas Abraham, a banking consultant based in New York.

However, while government-securities clearing represents only one of Sequor's services, it feeds into other services, such as securities lending. In losing clearing business, BankAmerica would likely lose some of the securities loan volume, Mr. Abraham said.

The Sequor Group under Security Pacific had one-third of the market for government securities clearance, which it shared about equally with Bank of New York and Chemical.

Shake-Up for Credit Unions

Elsewhere in Bank of America's back office, more than 200 West Coast credit unions were left scrambling for a new processor it announced in May that by Oct. 30 it would terminate Security Pacific's business of processing their check-like share drafts.

Although Bank of America has said it will continue to offer corporate checking account services to credit unions, at least two now plan to move all their business away from the bank.

Some of the credit unions dropped for share draft processing will continue to bank with Bank of America, but others were rubbed the wrong way.

"Bank of America was aggressively coming after us to keep [the corporate checking] business," said Malcolm Sinclair, chief executive officer, Ameron Federal Credit Union, which is sponsored by Ameron Inc., a construction company in Monterey Park, Calif.

Shifting Credit Unions

After 20 years with Security Pacific, Ameron is shifting its checking account to First Interstate Bank of California on Sept. 1, Mr. Sinclair said.

"B of A is not traditionally supportive of credit unions," said Michael Harden, assistant general manager, F&A Federal Credit Union, also in Monterey Park. "We didn't think they'd put the money into keeping credit unions functioning."

F&A is moving its corporate account to Western Corporate Federal Credit Union, Pomona, Calif.

Cash Management Stays Put

There have been no reports of defections of major corporate cash management customers -- a business that Bank of America is committed to.

However, some former Security Pacific clients say the conversion has been handled in a heavy-handed way.

Bank of America is widely seen as converting systems efficiently, and maintaining high-quality services. But in its haste to convert systems, it has paid less attention to customer relations.

For example, sources said, it expects customers to pay for training the customers' employees on the new systems.

Which Will Survive?

Champion Industries Inc., Stamford, Conn., uses about 200 banks for cash management, including Chemical, Bank of America for payroll services, and Security Pacific for lockbox.

"With Chemical [after its merger with Manufacturers Hanover Corp.] everything was laid out for us," said David Seibel, head of cash management for Champion. "They were honest -- they admitted they didn't know which products would survive."

Mr. Seibel said he was visited by account officers from both Security Pacific and Bank of America in the days after the merger was announced last year, and each said their own products would survive.

"They were each about 50% right," said Mr. Seibel.

But "B of A is solid," Mr. Seibel said. "So what do you do? We need a California bank. With B of A, you're dealing with the one bank that can do anything for you."

The Defectors BankAmerica customers that have switched their government securities clearings

Customer New Processor * Chase Manhattan* First Chicago Chemical* Greenwich Capital Bank

* Merrill Lynch * PaineWebber * Dean Witter* Kidder Peabody Bank of* Prudential New York

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