A money management subsidiary of NationsBank Corp. was thrown into turmoil last Friday after its chief executive and several officers quit to start a rival company.
Terence W. Collins, the former president of ASB Capital Management, left the Washington-based company and set up his own firm, Columbia Partners, nearby. Joining him were Closson L. Vaughan, ASB's fixed-income director, and six staff members.
The mass exodus is the latest in a string of defections that have hit bank-run money management firms this year.
More than 20 Mellon Bank Corp. employees left its Boston Co. Asset Management unit earlier this year. And Republic National Bank of New York lost its entire team of money managers. Subsidiaries of SunTrust Banks and Chase Manhattan Corp. have been similarly hit.
Some observers say such shifts are occurring because a booming market is luring star money managers to start their own enterprises. Others say the merger frenzy among banks is exacerbating matters, as money managers who had thrived at one bank struggle to adapt to the culture of a new parent.
ASB Capital was acquired by NationsBank in 1993 when the banking company bought its parent, MNC Financial, and folded the operations into NationsBank.
Officials at the company say it's business as usual, despite the exits. But a former MNC executive, who asked not to be named, said the departures of Mr. Collins and Mr. Vaughan will have a significant impact on the company's ability to retain business.
ASB Capital manages $9.6 billion of assets for corporations and some of the country's largest labor unions, including more than $1 billion for the International Brotherhood of Electrical Workers. Other major clients include the International Longshoremen's Association, Blue Cross & Blue Shield, BF Goodrich, and Gencorp.
"Some of that money has already migrated and I would not be surprised if more were to leave," said the former MNC executive.
An official for the IBEW - ASB Capital's biggest single client - would not comment about the turnover.
Robert M. Phillips, who on Monday was named president of ASB Capital, said he has named replacements for the top officers that left the company, and added that the defections have had only a minimal impact on business.
Indeed, Thomas F. Carpenter, chief economist for ASB Capital, estimated that assets under management have risen $1 billion since last September. The number of accounts has stayed level at 180, though "business has come and gone," he said.
Joining Mr. Collins and Mr. Vaughan at Columbia were two senior officers, Timothy Talley and James Martin, who worked for ASB Capital's client services. Other staff members who left to join the new firm included Steve Binder, Martha Hanlin, and Roger Hennefelv.
Walter Fatzinger Jr., president of First National Bank of Maryland's bank subsidiary in Washington, said the executives behind Columbia Partners are well regarded in the industry. "There will be serious competition for the rest of us in the investment management business in the Washington area," he added.