NationsBank Corp.'s acquisition of Bank South Corp. probably will end Bank South's institutional money management efforts.
Both banks were expanding their investment management operations when the acquisition was announced Sept. 5: NationsBank recently had opened Nations Gartmore Investment Management Co., a multiproduct money manager started as a joint venture with Gartmore PLC; Bank South was expanding efforts to bring in institutional assets to The Wealth Management Group, its institutional and trust management division.
Nations Gartmore will continue on course, and is not affected by the announcement, said Kevin Welsh, director of marketing and client service. But sources inside Bank South said they don't expect their institutional efforts to continue; the firm was seeking to acquire a money manager to expand its efforts, but that search has been cut short.
NationsBank, Charlotte, N.C., is acquiring Bank South, Atlanta, in a stock transaction worth approximately $1.6 billion. The sale is expected to close in the first quarter of 1996, subject to shareholder and regulatory approvals.
NationsBank is expected to absorb the Bank South clients and perhaps some of its investment management staff, although that is not yet clear. Bank South has $1.2 billion in assets under management, roughly 60% personal assets and 40% institutional.
Nations Gartmore opened its doors in July, offering international/global investment products including separate accounts, a commingled fund and four mutual funds. The joint venture has lined up 24 employees from among both partners and some outside hires, said Charles G. Smith IV, president of Nations Gartmore. The marketing and client service functions of Nations Gartmore will be based in NationsBank's hometown, and its investment management functions in London, Gartmore's base.
The mutual fund line, distributed as part of the bank's NationsFund family of funds, includes international, Pacific Rim and emerging markets equity funds and a global bond fund. The funds began offering institutional shares July 1 and added retail shares in August.
The commingled fund will offer an expanded index mandate similar to the international equity mutual fund; both will include approximately 80% stocks in the Morgan Stanley Capital International Europe, Australasia, Far East Index and 20% in emerging market stocks. Additional commingled products will be added as demand arises, said Mr. Smith.
The commingled fund will be launched this fall, said Mr. Welsh. The firm is waiting for its first investor, a county pension fund, to line up the necessary waivers from its board of trustees and fund its commitment, he said. He did not identify the client.
The mutual funds now have $721 million in assets; among separate accounts, Nations Gartmore manages a $20 million international equity portfolio for a European foundation and is in the process of transferring a European equity account of approximately $44 million from Gartmore's management to Nations Gartmore.
"We could be the beneficiaries of some very fortunate timing," said Mr. Smith. The U.S. markets have been so strong, and international and emerging markets have been so weak, that more executives of big pension funds are showing interest in emerging markets than did a year ago, he said.
Gartmore's investment professionals will handle portfolio management, but there will be a staffer dedicated to Nations Gartmore accounts within each Gartmore investment team, said Andrew Fleming, chief investment officer.
The investment products take advantage of Gartmore's international investment strengths but are tailored to the U.S. market, said Mr. Fleming. U.S. plan sponsors are more benchmark-driven, while U.K. sponsors are driven more by median manager returns, so the U.S. products are geared to remain more true to their discipline and centered on their benchmark.
Panmure Gordon, the London securities and brokerage firm owned by NationsBank, was closed and most of its staff absorbed by Gartmore as part of the deal.