U.S. Bancorp has switched investment bankers in the midst of its acquisition of West One Bancorp.
UBS Securities replaced CS First Boston Corp., which had advised the Portland, Ore., bank on its May agreement to buy West One for $1.6 billion.
In what observers call a highly unusual move, U.S. Bancorp has tapped UBS Securities for advice on merger-related asset and deposit divestitures, which are expected to be announced later this month. UBS, an affiliate of Union Bank of Switzerland, also advised Boise, Idaho-based West One on the sale.
The change shows that competition among bank advisers has reached the point where investment banks are not even assured of following a deal through to its conclusion.
It also marks a third high-profile assignment for the fledgling UBS team, most of whose members came from Salomon Brothers Inc. in April.
"We are elated to win the deal," said Tod Perkins, a UBS vice president who is working with U.S. Bancorp.
"They held a 'beauty contest,' and we submitted a proposal with a number of other players," he added. "Our team has known them for some time, so I'd like to say we won the assignment because of our relationship with them."
In addition to Mr. Perkins, managing directors Richard Barrett and Gerard Smith have known U.S. Bancorp chief executive Gerry Cameron for many years.
The investment bankers left Salomon earlier this year with several colleagues to start a bank group at UBS. The group almost instantly won the West One assignment. In July it advised Banc One Corp. on its unsolicited bid for Bank of Boston Corp., and now has scored the U.S. Bancorp assignment.
Why U.S. Bancorp changed investment banks is not clear.
The bank denied it was dissatisfied with CS First Boston.
"We have had a relationship with individuals at UBS for quite a long time, and we are pleased by the work that both UBS and CS have done, and UBS is just the one we selected to do the divestiture piece," said Donald Bowler, director of investor relations at U.S. Bancorp.
CS First Boston said there was nothing unusual about the switch. UBS probably offered a more attractive price, said Michael Martin, co-head of the firm's financial institutions group. The divestiture "is a separate transaction, priced for and charged for separately," he added.
CS First Boston could still advise some of the potential buyers of the deposits. First Security Corp., which CS First Boston is close to, has roughly $300 million of deposits in Oregon and probably would be interested in expanding there, said Jay Tejera, an analyst with Dain Bosworth Inc. in Seattle.
Winning the U.S. Bancorp assignment is significant beyond the divestitures, which may not amount to more than a $1 billion of deposits. Because U.S. Bancorp is still viewed as a takeover candidate, the investment bank that advises the company could enjoy a huge payday.
U.S. Bancorp's switch is also emblematic of how banks no longer use only one investment bank. In the past, most banks had only one adviser, but now it is common for banks to have advisers bid for select deals.
Boatmen's Bancshares, for example, has used Goldman, Sachs & Co., Morgan Stanley & Co., and Donaldson Lufkin Jenrette on deals in the last few years.
Switching advisers in the midst of a transaction in not as common, investment bankers said. In about 75% of cases in which an acquirer needs to divest assets or deposits, the same investment bank works on the whole transaction.
Another exception is Fleet Financial Group, whose highly publicized divestitures in New England are part of its pending purchase of Shawmut National Corp.
Fleet used Salomon Brothers on the original agreement. But between the February deal and the August divestment announcements, much of Salomon's bank team left for UBS.
Fleet used neither Salomon nor the departed bankers who settled at UBS, but instead chose CS First Boston and Keefe, Bruyette & Woods Inc.