The fact National Westminster is selling its U.S. bank might appear to undercut the British company's stateside loan-syndication team, but group head Glenn Marchak doesn't see it that way.
A branch system provides loan syndicators with access to middle market customers that need large loans. But Mr. Marchak, a senior vice president of Natwest Markets,
believes that the sale of Natwest Bancorp to Fleet Financial Group is more than offset by the British parent's acquisition of Gleacher & Co., a mergers and acquisitions advisory business. The profitability and visibility of the lending group could be greatly enhanced as a part of a global investment bank, Mr. Marchak says.
The percentage of business generated from Natwest Bancorp "wasn't insignificant," Mr. Marchak said, "but more importantly, going forward, the Gleacher acquisition provides all sorts of opportunity for us."
The 39-year-old executive's confidence that his group can win syndication business through an investment banking connection underscores the appeal of having an integrated set of bank products. It also further highlights the blurring distinction between traditional commercial and investment banking products.
The timing of the Gleacher acquisition seems particularly favorable for the lending team, which has made substantial progress in the two years since Mr. Marchak left Citicorp to lead the group.
The loan syndication group ranked 14th in volume of deals led through the first three quarters of last year, up from 24th for 1993.
Through the first three quarters of 1995, Natwest was second among foreign banks only to CS First Boston in the number of deals it led.
Indeed, even without the purchase of the advisory firm this year, Natwest had landed lead positions on several multi-billion-dollar deals.
Along with J.P. Morgan & Co., NationsBank, and the Bank of Nova Scotia, Natwest helped lead a $1.5 billion project finance for Universal Studios.
The British bank also joined Citicorp and Royal Bank of Canada in leading a $2 billion loan to Ontario Hydro.
The bank teamed up with Citibank and Scotiabank on a $4 billion loan for the Province of Ontario.
Natwest has also made strides in winning new clients. The bank led a $100 million loan for Omega Healthcare Investors, a real estate investment trust in Ann Arbor, Mich.
"We were very pleased with their capacity to organize and arrange the line of credit facility in a very timely fashion," said David A. Stover, the chief financial officer.
To be sure, Mr. Marchak acknowledged that the sale of Natwest Bancorp could mean giving back some of those volume gains in the coming year.
"The business we get from Gleacher is not necessarily going to replace the volumes that we saw out of the Bancorp," said Mr. Marchak. "But the character of those deals will be different. In the next year, we may lose position in the league tables, but we may improve our name recognition."
Nonetheless, the syndication group believes that the mergers and acquisitions platform of a firm like Gleacher might provide the bank with an entree into bigger, more profitable, and more challenging deals.
Gleacher served as adviser on American Home Products $10 billion purchase of American Cyanamid.
"You would think that if Gleacher were advising, if we have a relationship, we're a natural to come in and put a large chunk of money on the table as an underwriter," said Mr. Marchak.
"We'll have the man on the ground that has all the confidential information. Natwest can provide the commitment early on and get the money down, so you know the financing is there."
The mergers and acquisitions platform will provide it with a strong position from which to win other business, Natwest said.
"If you look at what CS First Boston has done, the mergers and acquisition area tends to be a wonderful one from which to deliver the loan product," said Mr. Marchak. "CS First Boston has done a superb job of using that as a way in"to other business.
M&A activity provides banks with access to the decision makers at a company, Mr. Marchak said.
The Gleacher acquisition, which just received regulatory approval a month ago, has not yet generated business for the loan syndication group, though Mr. Marchak said he's prepared.
"We're waiting for the knock on the door in the first transaction," he said. "We've got the team in place."
Mr. Marchak said the lending group could have developed its business without the Gleacher acquisition, but at a much slower pace.
"That would have taken longer to come to fruition," said Mr. Marchak. "The Gleacher acquisition will show returns almost immediately."