Bank merger joins tech rivals
The megamerger of BankAmerica and NationsBank puts rivals Robertson Stephens and Montgomery Securities under one roof.
This "merger within a merger" received scant attention in the blockbuster bank announcement, as neither investment firm even was mentioned in today's press announcement. But the combination could have a profound impact on financing throughout the high-tech sector.
Analysts note that the merger could result in duplication between the two firms, once fierce rivals, though representatives for the companies say the deal's impact is "too early to tell."
"You can't have too many people call on the same clients," said one insider. "There are some redundancies, and that either means retasking or letting some people go. It won't be pretty."
Last year, NationsBank bought Montgomery Securities for about $1.2 billion, while BankAmerica paid $540 million for Robertson Stephens. Both San Francisco-based companies have analysts that are considered stars on Wall Street, and both consider high-tech stocks to be a specialty. The technology sector in general, led by the likes of America Online (AOL) and Ascend (ASND), has been a significant factor in propelling what has been an enduring bull market.
The merged banking entity has no immediate plans to change operations of either investment banking firm, NationsBank spokeswoman Martha Larsh said today. In a conference call, executives said the two firms are looking forward to teaming up to "take a stick" to the investment bankers in New York, she added.
But it remains unclear what effect, if any, the merger will have on the employment or strategy of the investment firms, Larsh noted. BofA had similar comments.
However, Larsh said that between 5,000 and 8,000 jobs could be eliminated from the two banks (not the investment houses) as a result of the merger. The combined workforce of the two companies is 180,000. The bank merger is being valued at more than $60 billion and will create the largest U.S. bank.
"[BankAmerica Robertson Stephens] remains an instrumental force in the financing of preeminent technology companies, including Pixar (PIXR), Ascend, and America Online," Robertson Stephens states on its Web site. Besides taking many technology companies public, such as Exodus Communications, Montgomery hosts a popular annual conference for technology analysts.