Prudential Securities may be poised to put the final nail in the coffin of its troubled investment banking division, according to employees at the firm.
According to some on Wall Street, roughly 250 investment banking professionals at Prudential are awaiting news on whether the securities firm will opt to keep its remaining advisory and underwriting businesses. The company is expected to make a decision some time within the next two weeks.
"It's a constant daily vigil" among investment bankers at the firm, a Wall Street source said.
The move would follow the recent shuttering of its institutional bond division and the termination of several investment bankers.
Prudential's recent exit from its institutional fixed-income business, in which the company closed its municipal finance activities and its asset-backed securities business, is widely seen as a move to refocus efforts on retail brokerage.
Four-hundred traders and institutional sales representatives were laid off in the recent reorganization, which at the time Prudential executives said would "provide the retail sales force with greater access to the trading desks and more personalized service."
Also contributing to the employee concerns over further cutbacks, if not a complete closure of the bank, is the previously announced departure of some members of the investment bank. The firm's financial institutions group, led by P. Carter Rise, was eliminated when Prudential pulled back from the asset-backed market.
Mr. Rise did not return a phone call seeking comment for this article.
Late Tuesday afternoon John R. Strangfeld and James Price, Prudential Securities' recently appointed chief executive officer and president, addressed employees in a conference call.
A Wall Street source said he was told that the executives said they would try to make improvements at the investment bank but might shut it down.
Prudential is in the midst of a top-to-bottom repositioning of its securities and brokerage activities, which has prompted the turnover of several senior positions.
Early last month Prudential Securities chief executive Hardwick Simmons announced his retirement in apparent protest over a decision not to separate the company from its insurance parent.
Mr. Strangfeld, the 23-year Prudential veteran who succeeded Mr. Simmons, was most recently head of the firm's global asset management business. Mr. Price, who had been an executive vice president in the private client group, became the firm's president.
These senior level changes, followed within weeks by announcements that the firm would close down parts of its institutional business, have led the firm's investment bankers to wonder if more groups won't be cut.
Though Prudential has done well in some sectors, such as health care, thanks to its acquisition last year of the boutique Vector Securities International, it has struggled in other areas to compete against Wall Street's larger firms.
"I can't imagine the people in investment banking aren't looking for jobs right now," said one observer.
A spokeswoman for Prudential declined to comment on the future of the investment bank.
From Our Archive:
- Pru to Exit Institutional Fixed-Income Business- November 3, 2000
- In Brief: Prudential to Cut 425 In Fixed Income Unit- October 31, 2000
- In Brief: Prudential Creates New Variable Annuity- October 12, 2000
- Prudential Program Targets Foreign Investors- October 12, 2000
- Prudential Launches 2 Term Life Policies- July 27, 2000
- Prudential, Citi Mortgage Vets Lending Again- July 5, 2000