CoreStates Financial Corp. is taking an unusual approach to absorbing the investment units of the former Meridian Bancorp: It's leaving some of them alone.

While many post-merger banking companies consolidate all of their investment management capabilities under one roof, CoreStates is aiming to keep its two institutional money managers apart. The idea is to preserve the distinct identity, name, strategy, and investment style of each.

"Too often the tendency of banks is to smash things together," said Peter M. Welber, president and chief executive of CoreStates Asset Management. "We decided there was a tremendous amount of value in each. Our objective was to retain people, process, and performance."

Now, Philadelphia-based CoreStates sports two institutional money managers: CoreStates Investment Advisers Inc., which takes a fundamental approach to investing the $12.1 billion in assets it manages; and Meridian Investment Co., which applies quantitative models to invest $5.5 billion.

To cut costs, the marketing, client services, and operations staffs of the two units have each been combined. But investment professionals remain apart. The CoreStates people are in Philadelphia while the Meridian managers remain in suburban Valley Forge.

"As banks acquire investment advisory firms, who the parent is is becoming less and less important," Mr. Welber said. "We don't see any reason why that same philosophy doesn't apply here."

As a result of its April acquisition of Meridian, CoreStates now has a total of $260 billion under management or administration in the umbrella group headed by Mr. Welber. That unit includes not only the two institutional money managers, but CoreStates' and Meridian's newly combined personal trust, mutual funds, and custody businesses.

By keeping the institutional managers independent, CoreStates has experienced "no client attrition" from either group since the merger, said Mark Stainecker, chairman and president of CoreStates Investment Advisers Inc.

He added that it in order to keep its credibility among institutions and their consultants, CoreStates had to keep offering consistent products to its institutional clients.

For example, CoreStates, by keeping the units separate, has been able to continue touting the investment performance records of each. Last year, CoreStates had returns of 21.8% for yield enhanced fixed income; 37.6% for growth equity; and 39.5% for value equity.

During the same period, Meridian had returns of 18.1% for fixed income; 36.7% for core equity; 35.2% for special equity; and 29.4% for balanced investments.

"Meridian and CoreStates had some very successful marketing campaigns that attracted a lot of institutional clients," said Frank G. Frey, president of FMS Group Inc. "Psychologically, (clients) hired Meridian or CoreStates."

Mr. Frey, whose consulting group is based in Blue Bell, Pa., has worked for CoreStates in the past. He said that it was important for the bank to maintain the distinct identities of its money management units not just for its clients, but for its employees too.

"When you put them all under the same tent, then the egos go to work," he said.

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