Few in the banking industry have more experience than NationsBank Corp. at making acquisitions work, but a foray into the realm of traders a few years ago provided a whole new set of lessons.

In 1993 NationsBank bought Chicago Research and Trading Group Ltd. for $225 million. The Charlotte, N.C., banking company hoped the acquisition would help build its derivatives trading business and expand its minor presence in the foreign exchange markets.

The results have been mixed. Only six of the original 20 Chicago Research partners remain. Ten left last year as soon as their "golden handcuff" deferred-payment arrangements expired.

And though NationsBank has developed a solid interest rate swap desk and commodities derivatives unit, its efforts to compete against the big New York banks in foreign exchange have been something less than a roaring success.

Bill Maxwell, president of NationsBank Capital Markets, acknowledged that the bank made several mistakes in its Chicago Research experience. He said the banking company marketed financial products before it was ready to sell them. In addition, NationsBank at times moved too cautiously, trying not to step on toes at Chicago Research, but at other times moved too quickly.

"What you had at CRT was a situation where we bought a platform that had technology and outstanding people but didn't have the capabilities and the clients we needed," said Edward J. Brown 3d, NationsBank's president of global finance.

Now preparing for the $1.2 billion acquisition of Montgomery Securities, NationsBank officials say they will utilize the lessons learned from Chicago Research to try to smooth the way with the San Francisco investment banking house.

"There are many things we can take from CRT to make Montgomery go a lot smoother," Mr. Maxwell said. "We learned a lot."

But the difficulties encountered by NationsBank-considered among the best in the banking industry at absorbing mergers-should come as a warning to bankers and bank stock investors about the rush by banks into the brokerage and investment banking sector.

"I don't believe any of the bank managements that have bought investment banks know what they're getting into," said Nancy A. Bush, associate director of research and regional bank analyst at Brown Brothers, Harriman & Co., New York.

When NationsBank bought Chicago Research, the bank considered that it was bringing into the fold an up-and-coming firm it could build on to boost an array of financial products for existing customers and new ones.

And in many respects the superregional banking powerhouse got what it paid for. Revenues generated by Chicago Research have doubled to $280 million in the last four years, in line with NationsBank's stated projections in 1993, according to Mr. Maxwell.

Employment at Chicago Research is up to more than 1,100, from 750. And revenues from interest rate swap contracts have swollen to $140 million, from less than $10 million, he said.

That's particularly impressive considering that interest rate swap revenues have gotten razor-thin since every investment bank and many regional banks started selling them.

Many people think Chicago Research "hasn't worked very well," Mr. Maxwell said. "But we're hitting what we said we would hit."

But NationsBank has been less successful in developing products aimed at new customers-customers bigger than the middle-market companies that have long been the bank's bread and butter.

And in the more profitable areas of trading, the turf long ruled by the big New York banks, NationsBank has had a disappointing experience.

It spent heavily building its foreign exchange desk, people close to the company said. But profits from foreign exchange, $27 million in 1994, dropped slightly to $26 million in 1995 and then plunged to $4 million by yearend 1996 after NationsBank scaled back the operation substantially.

More than 20 people have left NationsBank's foreign exchange desk as a result of the downsizing. But the bank emphasizes that revenues have since recovered as the entire market for foreign exchange made a comeback this year.

This experience doesn't necessarily mean NationsBank hired poor traders in foreign exchange. Rather it's simply tough for any newcomer to make a splash in the foreign exchange arena, said Kenneth Cunningham, managing director at the Chicago consulting firm Gnosis Inc. and former head of trading at Continental Bank.

"It's a well-arbitraged market," he said, "so it's hard to take large proprietary trading positions without taking huge size."

In the end, NationsBank learned first-hand how difficult it can be to go up against the heavy hitters on Wall Street.

"NationsBank learned that Fortune 500 companies still like doing business with the New York money-centers and are reluctant to go elsewhere," said Richard X. Bove, banking industry analyst at Raymond James & Associates, St. Petersburg, Fla.

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