With offices in 22 states, the new BankAmerica would be the first banking company with enough physical reach to build a U.S. brokerage capable of going toe-to-toe with Wall Street.
"They'll have a distribution network that ultimately could rival the Merrill Lynchs," said Burton J. Greenwald, a Philadelphia based analyst.
BankAmerica Corp., San Francisco, and NationsBank Corp., Charlotte, N.C., announced plans to merge Monday in a $60 billion deal that would create the first coast-to-coast bank in the country.
The combined organization would have 1,158 brokers, which would place it among the nation's top 15 broker-dealers, according to the Securities Industry Association. It would be in the same league as regional brokerages like Piper Jaffray Cos., which is being acquired by U.S. Bancorp, and Waterhouse Investor Services, a unit of Toronto Dominion Bank.
Still, Mr. Greenwald acknowledged that it would take a "leap of faith" by the new BankAmerica to take on the brokerage heavyweights.
To be a player, the bank would have to build its sales force and infuse its staff with a Wall Street culture. That includes offering compensation packages equivalent to those paid to brokers at wire houses, he said.
Mr. Greenwald said the new BankAmerica would rise to the challenge.
"Certainly the opportunity to really distribute product on a national basis exists," he said.
Eric Rothmann, an equity analyst with Little Rock-based Stephens Inc., is a little more cautious in his predictions for the future of the BankAmerica brokerage unit.
"You have to see how it's going to play out before you see them go against Merrill," he said.
However, Mr. Rothmann said that in time BankAmerica could compete with firms like St. Louis-based A.G. Edwards & Sons Inc., which has a retail sales force of around 6,000.
"I want to see them take baby steps first," he said.
Other banks have become viable players through brokerage acquisitions, said J. Heywood E. Sloane, a principal with Wayne, Pa.-based consulting firm Diversified Services Group.
Toronto Dominion and Fleet Financial Group have both been acquisitive in the discount brokerage area, Mr. Sloane said.
Another bank, New York-based Citicorp, stands to gain a powerful retail sales force of 10,397 brokers-second only to Merrill Lynch & Co. nationally-if its proposed merger with Travelers Group is approved. The proposed institution, Citigroup, would be an entirely new type of financial services firm with the range of products it could offer investors.