analyst Nancy Bush to cease covering the bank, industry sources said. The move follows Ms. Bush's searing criticism of CoreStates when it sought a controversial merger deal with Bank of Boston Corp. last July. She publicly labeled the maneuver an "abomination" and was quoted as saying, "Thank God," when it later fell flat. Firing back, CoreStates chief executive Terrence Larsen in October asked Ms. Bush to discontinue coverage of his banking company, several independent sources said. "I have never heard of a company getting this personal," said Northwestern University finance professor Thomas Lys, when told of the reported incident. "I would not be surprised if this thing backfires." CoreStates president Charles Coltman confirmed that his $30 billion- asset company had contacted Ms. Bush. But the executive would neither confirm nor deny reports that Mr. Larsen was seeking to squelch the analyst. "A letter was sent to Ms. Bush," said Mr. Coltman. "It was a private communication, a private expression of our opinion on the issue, and that is all that needs to be said." Although sources are getting mixed signals on whether Brown Brothers Harriman is standing behind Ms. Bush, an officer of the firm, said in a terse telephone interview that the analyst's duties on CoreStates would not change. "She will continue to cover the stock," said Ronald Hill, director of research at Brown Brothers Harriman. Ms. Bush was contacted but declined to comment. The incident underscores banks' extreme sensitivity to Wall Street appraisals, especially when they affect merger strategies. Negative reports can mangle an acquirer's stock trading value, in some cases for years. That can undercut the economics of pending stock-swap deals and even cause a predator to lose out in the bidding for future targets. And analysts' criticisms can offend the sensibilities of powerful chief executives. At the American Banker's fall merger conference, for example, Donaldson, Lufkin & Jenrette analyst Thomas Brown said First Union Corp. had disseminated "wildly optimistic" projections about its planned acquisition of First Fidelity Bancorp. Speaking at the same gathering, First Union chief executive Edward Crutchfield referred to Mr. Brown as "that little red-haired boy," asserting that he was out of step with the rest of the analytical community. "Every analyst has occasionally been given the cold shoulder," said Mr. Brown, who shrugs off Mr. Crutchfield's remarks. "It is not all that unusual." What distinguishes banking's Wall Street relationships from those in other industries, however, is that banks are more likely to have multiple accounts with firms employing the equity analysts who cover them. In the name of preserving lucrative investment banking and underwriting assignments, Wall Street firms occasionally acquiesce to a bank's demands that an equity analyst be silenced. In 1991, for example, NationsBank Corp. temporarily suspended trading ties with Kidder Peabody & Co. after analyst Charles Peabody issued a series of "sell" recommendations on the southeastern colossus. Mr. Peabody eventually left the firm to work for UBS Securities Inc. And in 1994, analyst George Salem came under serious pressure while at Prudential Securities for his critical reports on Banc One Corp. and Citicorp, according to sources and published reports. The analyst now works for Gerard Klauer Mattison & Co. The episode that brought Ms. Bush into collision with CoreStates began last summer, when it was revealed that the Philadelphia-based company was negotiating a merger of equals with Bank of Boston Corp. The franchises of the two companies did not overlap, limiting potential expense reductions, and Ms. Bush said the market would consider the potential union an "abomination." She accused the banks' managers of placing job preservation above the interests of shareholders. "Of all the deals that I have ever encountered, that would have been by far the worst," she told American Banker one week after the deal fell apart. "The only thing those banks have in common is the lack of credibility of their managements." Indeed, the former chairman and chief executive of Bank of Boston, Ira Stephanian, was forced out by the bank's board not long after the CoreStates deal collapsed. John Kuwathy, director of investor relations at Bank of Boston, described Ms. Bush as "outspoken," but he said the institution has a good relationship with the analyst. Mr. Larsen of CoreStates has turned his attention to other merger opportunities, agreeing in October to acquire the $15 billion-asset Meridian Bancorp, Reading, Pa. It does not appear that Ms. Bush has issued any commentary on the CoreStates-Meridian deal. Attempts to censure an analyst can come back to haunt an institution, warned Professor Lys, who specializes in the study of analyst-company relations at Northwestern's J.L. Kellogg Graduate School of Management. "Whatever insult the analyst may have said, I don't see what the company gains by forcing that person out," Mr. Lys said. "In some respects, the move gives more credence to the analyst's comments."
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