Bankers are hoping 1995 will be remembered as the year one-stop shopping for corporate America finally took hold.

Commercial banks made major forays in investment banking, sweetening loan deals with high-yield-bond underwriting, financial advice, and equity investment, even as attempts to undo laws that have separated commercial and investment banks stalled in Congress.

The commercial banks' initiatives were answered by a spurt in syndicated lending - essentially bank loans - by investment banks.

"The future is definitely now," said Bram Smith, managing director and head of loan syndication at Bankers Trust New York Corp., who pointed out that commercial bankers have talked for years about one day adding such products to their shelves.

The idea of offering a full menu of corporate financial services as a way to win a larger share of the market has been embraced by the large institutions that dominate syndicated lending. Some midsize banks, like Cleveland-based National City Corp., also see promise in investment banking. (See article on back page.)

The battle seems certain to heat up next year. Institutions reportedly building nontraditional business lines include Donaldson, Lufkin & Jenrette and Morgan Stanley, which are said to be preparing to launch loan syndication operations. BankAmerica Corp., NationsBank Corp., and First Union Corp. are in various stages of developing high-yield-bond businesses.

"Everyone's trying to do it," said James B. Lee Jr., head of global investment banking at Chemical Banking Corp.

The concept of providing a host of financial services under one roof is not without its skeptics or its obstacles, however.

For one thing, some bankers cynically suggested that if everyone's rushing to do it, that's reason enough to stay out.

Others pointed to the cost of hiring talent in several different areas. "There's a big gap between starting and becoming a force in the market," said Bruce Ling, the head of loan syndications at CS First Boston. "The capabilities to have a serious high-yield-bond effort are significant in terms of research, sales, and trading."

Indeed, bankers said that companies engaged in one-stop shopping have to land the leading role in deals to justify their costs.

During the year, Chemical won the lead on a $1.55 billion loan for Clayton Dubilier & Rice's acquisition of Riverwood International and a $650 million high-yield bond.

Chemical also helped Time Warner spin off its Six Flags Theme Parks to Boston Ventures, providing $600 million in bank financing, leading a $285 million high-yield offering, acting as financial adviser to Six Flags, and committing equity to the deal.

"We are defining one-stop shopping as our approach to investment banking," said Mr. Lee. "It combines the best of capital commitment, financing execution, and advisory work in a coordinated approach focused on our client."

Bankers Trust has also won some attractive deals, leading a $975 million bank loan and a $350 million high-yield bond for Ralph's Supermarkets, and a $2.6 billion loan and $1.2 billion bond for Tenet Healthcare.

Bankers Trust was an equity investor and led a $430 million loan and a $200 million high-yield bond for Dominick's Finer Foods.

Among the investment banks that answered the challenge with syndicated loans, Goldman, Sachs & Co., was one of four lead banks on a $4.0 billion credit facility for Powergen's acquisition of Midlands Electricity. The investment bank had been the mergers and acquisitions adviser on the British utilities deal.

Merrill Lynch co-led a $950 million loan for Elsag Bailey, a company it took public in 1993 and for which it served as financial adviser on an acquisition this year.

While commercial and investment bankers are just as adamant about the merits of one-stop banking, they are evolving to that point for different reasons.

With the regulatory shackles loosened by the creation of section 20 investment banking subsidiaries, commercial bankers have developed high- yield-bond powers to participate in one of banking's highest-margin business.

The bankers say that by establishing underwriting units now, they will get a leg up on the competition if Congress changes the laws that limit banks' underwriting revenue to 10% of total revenue.

Seeing commercial banks as new competitors, investment banks have created syndicated lending operations to defend their franchises and use their expertise to win additional business.

"We are leveraging our knowledge and earning incremental revenue," said Simon Jawitz, vice president and co-head of the bank loan group at Goldman Sachs.

Additionally, the increasing liquidity of the bank loan market has led to a convergence with the bond market, encouraging investment banks to expand their franchises.

"The presence in the bank market of non-commercial-bank lenders who are significantly interested in liquidity has encouraged investment banks to aggressively pursue the business," said Mr. Jawitz.

Clearly, enough clients have tapped banks for various roles to encourage those that can provide these services to continue to do so, while enticing others to develop those abilities before falling behind.

Those that have developed full-service franchises are resolute about maintaining them.

"One-stop shopping is a high-priority strategic initiative at Goldman Sachs," said Mr. Jawitz. "It's a business we feel we want and need to be in."

Both commercial and investment bankers said that their clients are pushing for one-stop shopping.

"When we go to a market to sell a company's debt, we already know what the enterprise value is, what the company is worth, the merger capability, and the presence in equity markets," Mr. Jawitz said. "All that expertise can come to bear as part of the selling process."

In addition to taking advantage of a broader range of expertise at a bank, corporate clients benefit from a flexible, timely, and efficient operation, bankers said.

In earlier transactions, such as the Six Flags deal, concentrating the lead roles in one bank allowed for immediate changes in the relative sizes of the high-yield and bank loan portions of the acquisition.

Investors had demanded higher yields from the capital markets in the week leading up to a junk bond issue for the Six Flags acquisition, increasing the cost of the deal.

Chemical was able to decrease the size of the junk bond and increase the size of the institutional investor portion of the bank loan, potentially reducing the total cost of the transaction.

"From our perspective, one-stop shopping provides a seemless execution," said Chris Birosak, a director in the loan syndication group at Merrill Lynch.

The client gets quality and efficient service "on tight time frames where confidentiality is key," said Mr. Birosak.

And, with a number of commercial and investment banks looking to expand their business lines, the idea is one that seems to have taken root.

"Many of the commercial banks are clearly attempting to expand their food chain to include other revenue opportunities," said Kevin Meenan, a principal with Meenan, McDevitt & Co., Harrison, N.Y.

"Also, the Wall Street firms have counterattacked by looking to capture the loan business," he said. "Our forecast is that that trend will continue through 1996 and beyond."

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