National City Corp. has rebranded its asset management units under the Allegiant name in an effort to develop assets through cross-selling, but analysts also see it as an effort to cut costs.
The Cleveland banking company announced Wednesday that its Armada Funds will become the Allegiant Funds next Monday; National City Investment Management Co., the funds' investment adviser, will become Allegiant Asset Management Co.; and its institutional asset management business will adopt the name Allegiant Institutional Services.
John Abunassar, an executive vice president of institutional asset management, said the company decided to make use of the name it acquired in April 2004 with St. Louis-based Allegiant Bancorp because the brand conveys the right attributes and was preferred by customers.
He said he hopes the rebranding will increase sales and revenue.
"This rebranding makes it easier for customers to do business with us. By putting three units under one brand," he said of what will collectively be called Allegiant Asset Management Group, "we hope to increase our cross-selling."
Analysts said they see the branding effort as part of a cost-cutting strategy National City has been executing this year.
In February David A. Daberko, the Cleveland company's chairman and chief executive officer, said in a letter to shareholders that was filed with its annual 10-K report to the Securities and Exchange Commission that National City was carrying out a plan to improve revenue, costs, and organization.
The letter expressed hope that the initiatives would be adopted this year and raise revenue by 2006.
Geoffrey Bobroff, the president of Bobroff Consulting in East Greenwich, R.I., said he is not sure that rebranding its asset management businesses will help National City cut costs in the long term.
"I am sure you can save some money by merging funds," he said, "because fewer funds will save you some money. I am just not sure how successful this can be long-term."
Other banking companies, most recently Bank of America Corp., have rebranded their fund units, Mr. Bobroff said, but it is difficult, especially when the new brand is not associated with the bank.
"Allegiant, or Armada, or any of their prior names don't have any continuity, touch, or brand awareness with the bank," he said. "It is an expensive process to rebrand something especially when you are trying to associate with a bank that is advertising under a completely different name. By making their asset management company Allegiant, they are completely pulling this unit out of alignment with the bank."
Mr. Abunassar said the rebranding was not a cost-cutting move. The company has trimmed some mutual funds, he said, but plans to add three soon.
No marketing or advertising blitz is planned to push the new brand, he said, adding, "We want to grow this brand through the reps and our client base and develop a presence in the marketplace through the individual delivery strategies."
The rebranding completes a year-long redefinition of National City's asset management strategy, Mr. Abunassar said, during which the business moved from a centralized investment management structure to a "hub and spoke model."
The overhaul began in April 2004 when Allegiant Investment Co. became a wholly owned subsidiary of National City, bringing in 10 St. Louis-based professionals who assumed management of the parent's small-cap core fund.
In May 2004, seven professionals in Pittsburgh, formerly of Strong Capital Management Inc., the scandal-plagued fund company that was bought last year by Wells Fargo & Co., joined National City as co-portfolio managers of the large-cap growth, core equity, and diversified growth styles.
Also last year, Michael Chren and Ed Johnson joined National City Investment Management Co. to lead its large-cap value team in West Palm Beach, Fla.
This April, National City added a structured equity team of six people formerly with Harris Investments in Chicago.
"In the last 12 to 18 months we have added teams, and we'll continue to add teams," Mr. Abunassar said. "As we have done in the past year we plan to look at opportunities for acquisitions of individuals or firms to complement the strategies that we offer today."
In addition to enhancing what National City already offers, he said, the asset management group will look to add alternative investment products. Allegiant Asset Management has $31 billion of assets under management, he said, and hopes to "put together substantial growth" in the next three to five years.
