Bankers these days discuss the future competitive landscape of their industry in language usually reserved for video games, using terms like global domination and superpower.
For the most part, however, the stock market has ignored talk of the rapid convergence between commercial and investment banks that conjures up visions of such strength and business firepower.
For instance, the shares of New York's J.P. Morgan & Co., which now gets most of its earnings from investment banking, are still trading in line with those of commercial banks.
But Brown Brothers Harriman & Co. analyst Raphael Soifer says he thinks the inevitable movement toward such universal banks - a familiar concept in Europe, especially in Germany and Switzerland, but not in the United States - is well under way.
Several events during the first quarter marked an acceleration of the trend, he noted.
"I was struck over the last few months by the increasing overlap, which becomes more obvious when someone like a Bram Smith goes from Bankers Trust to Morgan Stanley and a Mark Davis moves from Salomon Brothers to Chase Manhattan," said Mr. Soifer.
Mr. Smith previously led the loan syndication efforts at Bankers Trust New York Corp., while Mr. Davis had been co-head of mergers and acquisitions at Salomon Brothers.
In response to what he believes is the "quickening pace of the convergence," Mr. Soifer identified 16 companies - including J.P. Morgan - as competing for the "disproportionate rewards of oligopoly" in world class investment banking.
This cluster, which also includes 10 commercial banks and five independent investment banks, encouraged the analyst to create a new "emerging industry group" called global investment banks.
Mr. Soifer identified several business lines in which this new genre competes: public and private corporate finance; mergers and acquisitions; sales, trading and research of equities, fixed-income securities and derivative products; investment management; and related operational services.
"It makes more sense to follow a group of companies that are competing against one another with the same general objectives" than it does to lump companies like Morgan Stanley with A.G. Edwards, a regional brokerage, and J.P. Morgan with Wells Fargo & Co., the California superregional bank, he said.
The U.S.-based companies competing for a dominant position are Bankers Trust, Lehman Brothers, Merrill Lynch & Co., J.P. Morgan, Morgan Stanley, Salomon Brothers, and Goldman, Sachs & Co.
The foreign-based members of the group are ABN Amro Holding, Barclays Bank PLC, CS Holding, Deutsche Bank, Dresdner Bank, HSBC Holdings, Natwest Group, Swiss Bank Corp., and Union Bank of Switzerland.
Mr. Soifer said the U.S.-based companies are entering the global competition with "a huge head start over their foreign-based rivals," because of their presence in the largest capital market in the world and because of the regulatory restrictions on foreign banks operating securities subsidiaries in this country.
Other analysts on Wall Street also recognize the reality of the business convergence, even if the stock market still doesn't.
"J.P. Morgan is unfortunately thought of as a bank, when it's a broker- dealer predominantly on its income statement," said Katrina Blecher, a bank analyst at Gruntal & Co. Only 13% of Morgan's assets are loans.
Nonetheless, once the Depression-era Glass Steagall Act, which has mandated separate ownership of commercial and investment banks in the United States, falls, "we'll see much more convergence in this industry, which will bring the endgame in which the big universal banks will swoop down on Wall Street and start buying up firms," the analyst said.
Mr. Soifer said he expects to see somewhere between four and eight of the 16 companies on his list commanding a huge market share of a wide range of businesses.
There is something else notable about Mr. Soifer's global investment banking group: The big names that are missing.
Citicorp, the analyst noted, is "a growing investment banking giant in emerging markets," but does not compete heavily in the United States or Europe. The "new" Chase Manhattan is focusing on other areas.
Bear, Stearns & Co.; Donaldson, Lufkin & Jenrette Securities Corp., Dean Witter Discover & Co., and Travelers are all investment banks to be sure, but not on the same global scale as Mr. Soifer's "Sweet 16."
Finally, the lack of Japanese names on the list reflects the insular and regional character of that country's financial system and markets, as well as the relative weakness of its current economy.