Edward J. Brown 3d is undaunted by the internal squabbling that preceded Wednesday's merger between BankAmerica Corp. and NationsBank Corp.
The president of global capital raising and global capital markets for the newly created powerhouse will oversee a full range of corporate finance products at the first coast-to-coast commercial bank.
The bank will have a huge and varied client list. The former NationsBank favored middle-market corporate clients and leveraged lending, while the old BankAmerica focused on larger corporate clients and Latin America.
"We have the best client base of any financial services company in the world. It is very diverse, both geographically and in terms of industry," Mr. Brown said.
But he faces the challenge of coordinating the far-flung groups, with syndicated lending remaining in Charlotte, equities and M&A based in San Francisco, and the high-yield group relocating staff from both Charlotte and Chicago to New York.
"I think there's some advantage to being a larger totality. Yet I don't think that size is in itself the most important variable," said Samuel Hayes 3d, Harvard Business School professor of finance. "The compatibility of people who are going to be dominating the combined unit is probably the most important factor."
The new BankAmerica will likely nudge Chase Manhattan Corp. from its perch as corporate America's leading syndicated lender. It may also chalk up substantial gains in nontraditional banking areas such as equities and junk bonds.
All of these fall within Mr. Brown's purview, along with off shore capital markets groups in London and Hong Kong that, among other things, trade in exotic instruments such as foreign exchange derivatives.
Even before the merger was completed, Mr. Brown got a taste of what it is like to negotiate with high-flying financial players-his own.
The selection of NationsBank's Thomas White as head of high-yield over Jerome Markowitz, a colleague at that bank's securities subsidiary, led to discord between executives culminating in the departure last week of the subsidiary's chief executive, Thomas W. Weisel.
High-yield has always been a tiny part of the San Francisco-based firm Montgomery Securities, which Mr. Weisel sold to NationsBank for $1.2 billion last year. "But it was symbolic of larger issues of control," one Montgomery insider said.
Lewis W. Coleman, Montgomery's co-executive director of investment banking, was tapped to succeed Mr. Weisel. Mr. Coleman spent ten years in BankAmerica's wholesale division.
"Lew Coleman knows NationsBank, Montgomery, and BankAmerica well," Mr. Brown said. "I have complete confidence in him."
Carter McClelland has also joined Montgomery, although the Wall Street veteran, who served a stint as head of Deutsche Bank North America, almost backed out due to the disruption over Mr. Weisel's departure.
Mr. Brown said he doesn't expect competition between top executives to have any influence on the bank's corporate customers.
"We are focused on the needs of our clients," he said. "The bottom line is that clients don't care what our internal structural issues are as long as we meet their needs in a value-oriented fashion."
R. Jay Tejera, Dain Rauscher's managing director of research, urged that bickering among executives shouldn't curtail the integration of investment and commercial banking capabilities. "I've seen it work on a smaller scale," he said.
Though equities origination and M&A advisory will remain in San Francisco, where Montgomery has been based for the last 27 years, BankAmerica plans to increase its New York-based equities sales and trading group.
The combined bank, not including the former BankAmerica's securities subsidiary which has been spun off, would have ranked 14th in overall U.S. equities underwriting over the past year, weighing in with 42 deals worth $2.5 billion, according to Securities Data Co.
Meanwhile, it would have ranked 13th in domestic high-yield underwriting, with 32 deals valued at $3.7 billion. Junk bonds have generally been the most successful investment banking product adopted by banks in recent years.
But the combined BankAmerica would have made its most startling leap in the charts, on a pro forma basis, with syndicated lending. Over the past year, the two merged banks raised $465.7 billion in 912 deals.
That was about 10% greater than the $424.2 billion that longtime industry leader Chase Manhattan Corp., which tends to favor larger deals, raised in 592 syndicated loans.
The further narrowing of the syndicated lending market at the top may result in a stronger position for all the big players, according to Mr. Tejera.
"The basic issue is that the wholesale business has about ten or twelve major players and it needs to have about five to stabilize margins," he said.
Mr. Brown, who held the same post at NationsBank before the merger, said the international presence his bank has gained is also important to his strategy.
"BankAmerica brought us a strong capital markets position globally, which clearly NationsBank did not have," he said.
The San Francisco-based bank long had a big presence in Latin America, and the combined bank will also have capital markets offices in London and Hong Kong.
Though global capital markets have cratered since the two banks announced their plans to merge last April, that shouldn't cause the bank to slow down its push abroad, market observers say.
"There may be some pressure to slow down the move abroad because of current market conditions. But I think that would be a big mistake," Harvard's Mr. Hayes said.
"They should move aggressively now. In fact, they may be able to establish stronger positions in certain markets because others will be more faint-hearted," he said.
