A round of job-hopping is expected to occur as early as next month among bank analysts in light of the recently announced Travelers Group Inc. deal for Salomon Brothers Inc.
Executives at Travelers and Salomon indicated early on that at least 1,500 layoffs would result from the deal, involving investment bankers, analysts, traders, and back-office workers.
Clearly the bank equity and bond research departments of Salomon and Smith Barney Inc. overlap. Smith Barney is a division of Travelers. Pruning the payroll will not be easy.
For example, Salomon's senior bank analysts, Carol S. Berger, managing director of bank equity research, and Diane B. Glossman, director of bank equity research, have been Institutional Investor-rated. The financial markets journal conducts a highly regarded poll to name the best analysts in the view of portfolio managers. And the two have upward of 50 years of bank research experience.
Meanwhile, Smith Barney's principal bank analyst, Henry C. "Chip" Dickson, is also Institutional Investor-rated. Senior bank analyst Jacqueline Reeves, however, is not. Together, they bring nearly 30 years of bank research to the table.
Although a number of scenarios have been rumored, many Wall Street watchers believe Ms. Berger and Ms. Glossman are less likely to survive the merger. The same holds true for senior bank bond analyst David Hendler at Smith Barney.
"Salomon has the best overall team in the bank equity business," said a source who declined to be identified. "But Smith Barney is acquiring Salomon. When Smith Barney took over Shearson, they asked the Shearson analysts to step aside."
Others sources pointed out that Smith Barney also has the better distribution and a history of supporting favorite analysts.
"The Solly people make up a superior team, but they don't know anything about retail," said another source who also declined to be identified. "Smith Barney also may not want to rankle its clients who are loyal to" the bank research team.
There is also the question of salary. Salomon is well known for paying its top-performing employees. Ms. Berger's salary has been rumored to be at least $1 million; Ms. Glossman's salary also is said to be lofty.
At a time when cost-cutting is near the top of the agenda for Travelers chairman Sanford I. Weill, "Smith Barney is not going to pay those kind of salaries," said market experts.
Another signal suggesting that Smith Barney's bank research team will survive is the freshly created Salomon-Smith Barney management committee.
Two high-flying Smith Barney equity executives-Steven Black and Robert Di Fazio-are on the committee but only one top equity executive from Salomon-Arthur Hyde.
Regardless of who is retained, many on the Street believe that all the analysts will land on their feet. Deutsche Morgan Grenfell, Lehman Brothers Inc., and Prudential Securities Inc., which lost its entire banking team this year, are looking for top people.
There really is no reason for anyone to be anxious, said the head analyst at Morgan Stanley, Dean Witter, Discover & Co., Arthur P. Soter, who has been in the bank equity research business for 25 years. "Other firms look at these kinds of mergers as opportunities," said Mr. Soter. "The Street is always gobbling up people to upgrade their talent."
Indeed, shortly after Morgan Stanley acquired Dean Witter, well-regarded bank analyst Anthony R. Davis landed firmly on his feet at SBC Warburg Dillon, Read.
Street sources seem more certain that Salomon's bank bond analyst Ethan M. Heisler will survive the cut. Salomon's underwriting and secondary trading are huge compared to Smith Barney's.
The world's largest bond trader underwrote $38.4 billion of debt from July to September, according to Securities Data Co. Smith Barney did $5.8 billion during the same period. Experts also pointed out that Smith Barney's fixed-income division is not represented on the Salomon-Smith Barney management committee.
Bank equity and bond analysts at Salomon and Smith Barney either declined to comment for this story or were unavailable to answer questions.