Wachovia Corp. is hanging out a full-service brokerage shingle after buying Interstate/Johnson Lane.
This month's acquisition of the Charlotte, N.C., brokerage operation brings 460 brokers into the fold at Wachovia, where they are to operate under the IJL Wachovia moniker with 160 representatives from the bank's brokerage. IJL Wachovia has more than 175,000 accounts, with $18 billion.
The bank's interest in Interstate/Johnson Lane was fueled by its desire for a full-service brokerage operation, said Edwin A. Dalrymple Jr., senior managing director of Wachovia Securities Inc.
"Probably the largest piece missing was equity underwriting and sales," he said. Wachovia's investment product menu had consisted mostly of mutual funds, annuities, and some bonds.
As part of a $23 million compensation package, the bank kept several Interstate/Johnson Lane executives to run the business, including Mr. Dalrymple and Douglas R. Aldridge, who was named head of IJL Wachovia. Mr. Aldridge had run Interstate/Johnson Lane's private-client group, where he also reported to Mr. Dalrymple.
The retail businesses, IJL Wachovia and Wachovia Investments Direct-a discount on-line brokerage-and the institutional business, Wachovia Capital Markets, all come under the Wachovia Securities umbrella.
Because Wachovia plans to cater to the different styles of its bank brokerage and the former Interstate/Johnson Lane, the sales forces will remain separate, Mr. Dalrymple said.
"These are different markets and different regulatory environments," he said.
Wachovia's investment counselors continue to work in branches and team up with specialists in Wachovia Private Financial Advisors, a group managed by W. Robert Newell.
The financial consultants from Interstate/Johnson Lane continue to work out of their 63 offices. Another broker-dealer acquired in the deal is CapTrust Financial Advisors, which has 11 investment managers who deal with wealthy clients. CapTrust has eight offices, including three in Florida, where Wachovia expanded in recent years.
The banking company-which has dual headquarters in Atlanta and Winston- Salem, N.C.-and Interstate/Johnson Lane both have retail offices in the Carolinas, Georgia, and Virginia.
"We all agreed the best way to do it is to leave brokers alone and figure out how to enhance what's on their desktop," said Peter L. Bain, a Baltimore-based principal of Berkshire Capital Corp., which advised Interstate/Johnson Lane.
For example, IJL Wachovia brokers have been given a bank hot-line number for credit referrals.
Wachovia plans to combine some back-office operations, such as securities clearing, in the next six months. Clearing capabilities are to be consolidated in Charlotte, where Interstate/Johnson Lane has its trading operations. Some Wachovia back-office employees in Winston-Salem are being offered jobs there.
Interstate/Johnson Lane had net income of $3.5 million in the quarter that ended Dec. 31; earnings were up 35%, to $14.7 million, for the fiscal year that ended Sept. 30.