The encroachment of commercial banks onto Wall Street's turf-mostly by acquiring securities firms-has not gotten them very far with America's largest corporations, according to a survey released by Reuters last week.
In the survey of chief financial officers at S&P 500 companies, only J.P. Morgan & Co. ranked among the top 10 investment banks overall, coming in fifth.
By contrast, in a similar Reuters survey focusing on mid- and small-cap companies in April, two other banks shared that distinction with Morgan: Bankers Trust Corp. and NationsBank Corp., which ranked sixth and eigth, respectively. In that survey Morgan came in 10th.
The two surveys, which applied the same methodology to large and smaller cap companies just three months apart, demonstrate the successes and limitations of buying into the securities business.
"What we are seeing is a possible segmentation, in which banks make a targeted effort to penetrate a particular size sector of the market," said Samuel Hayes 3rd, professor of finance and investment banking at Harvard Business School.
Mr. Hayes said it makes the most sense for commercial banks interested in pursuing investment banking to concentrate on the middle market.
"The top-tier corporate and institutional market is so sophisticated that to provide something which they consider to be value added would require substantial resources and deep talent in targeted areas," he said.
J.P. Morgan is "kind of an exception," he added.
Morgan, which has been a lender to the country's largest corporations since early in this century, has spent the last two decades carving out an investment banking niche by building internally.
One giant in the investment banking world did not make the top-10 list: Donaldson Lufkin & Jenrette. Mr. Hayes said he found that surprising.
"I have long categorized DLJ, Bear Stearns, and J.P. Morgan among the contenders that might move up into the bulge group," he said. "Maybe the answer is that they fell between the cracks because of the nature of their special strengths."
DLJ is the largest underwriter of junk bonds-securities that do not apply to the kind of mature companies included in this study.
In the same survey, conducted by New York-based Tempest Consultants Inc., large-cap fund managers were also asked to rate investment banks. J.P. Morgan, which ranked sixth, and Deutsche Bank, ninth, were the only two commercial banks to reach the top ten, using criteria such as pricing and research.
In their ratings of brokerage services, fund managers ranked Bankers Trust 10th, Morgan 11th and NationsBank 14th. Other banks that rated highly were Societe Generale (16th), Canadian Imperial Bank of Commerce (17th), Deutsche Bank (18th), and BankAmerica Corp. (19th).