Merger in New England: Robertson Stephens Unit CEO Sees Major Plus to

Michael McCaffery, chief executive officer of BancBoston Robertson Stephens, delivered a pep talk to his staff Monday morning about the advantages its parent's planned merger with Fleet Financial Group would bring to the firm.

Chief among them: an affiliation with Quick & Reilly, the nation's third-largest discount brokerage, bought by Fleet for $1.6 billion in 1997.

"Quick & Reilly gives us something we have never had: a traditional retail channel," Mr. McCaffery said in an interview yesterday.

For the first time, Robertson Stephens, a San Francisco investment bank known for bringing technology firms public, would have a direct route for getting its stock issues into the hands of retail investors.

That and other potential perks set the BankBoston Corp.-Fleet Financial deal apart from its latest brush with a parent banking company's merger.

Only months after Robertson Stephens was sold to BankAmerica Corp. in 1997, BankAmerica set plans to combine with NationsBank Corp. NationsBank owned Montgomery Securities, a rival San Francisco equities firm.

As a result of that deal, BankAmerica spun Robertson Stephens off last year to BankBoston Corp. for $400 million in cash and a $400 million employee retention pool.

By comparison, the BankBoston-Fleet merger announcement is a bit ho-hum, a Robertson Stephens banker said.

"We've done this before in a much more disruptive situation," said one insider.

Still, Robertson Stephens executives said they were excited about adding Quick & Reilly to their mix. Though the firm has a large global institutional brokerage-with about 50 salespeople and 500 accounts in the United States and Europe-executives have long pondered how best to establish a retail channel.

Last year they founded a high-net worth brokerage aimed at executives with the companies that are their investment banking clients.

Robertson Stephens also has a strategic relationship with E-Trade, which it brought public, providing the on-line broker with research and equity products.

The long-term future of that alliance remains undetermined, though Mr. McCaffery said he anticipates continuing it for the foreseeable future. Quick & Reilly founded rival on-line broker Suretrade in 1997.

Though Fleet said last week it might consider spinning off Suretrade- speculating that the bank could get as much as $600 million for the on-line unit-Mr. McCaffery said he spoke with executives at Fleet and Quick & Reilly last week regarding the potential synergies between the two banking units.

"We discussed how the Robertson Stephens organization might be able to provide research and new issues to Suretrade that will help clarify its strategy," Mr. McCaffery said.

Robertson Stephens would also benefit from a wealthier parent, Mr. McCaffery said, with the combined bank becoming the nations eighth largest in terms of assets. Increased cross-selling opportunities, particularly in the technology sector, could boost the San Francisco firm's client base, too.

Another boon: the investment bank may return to its original name of Robertson Stephens & Co. According to Mr. McCaffery, BankBoston executives are comfortable with the idea of dropping the bank's name from the firm after the merger with Fleet.

Little else would change at the unit, he said. After the bank merger, which is expected in the fourth quarter pending regulatory approval, Mr. McCaffery is expected to continue reporting to BankBoston vice chairman Paul Hogan.

And the outlook for staffing is positive.

"I don't think there's any overlap at Fleet," said Harold Schroeder, a bank equity analyst at Keefe, Bruyette & Woods Inc. "With greater cross- selling opportunities, they may even staff up."

Though Fleet does not have an equities shop, it does have a high-yield bond unit staffed with Citigroup executives hired last summer.

BankBoston also has a junk bond group. The Robertson Stephens executive said the company had benefited by cross-selling high-yield products to their clients.

BankBoston has employed a relatively hands-off approach to its securities acquisition, and Robertson Stephens executives expect that to continue, according to a source at the firm.

"The bank merger has been more about cross-selling than integration," the executive said. "It is not like some other mergers where the investment bankers are reporting up to one industry head."

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