CHARLOTTE, N.C. - NationsBank Corp. officials hope they can convince Barnett Capital Advisors clients to move their $2 billion in pension money to one of NationsBank's four investment subsidiaries.
Barnett Capital, a Jacksonville, Fla.-based money manager with $11.2 billion in total assets, acquired by NationsBank last year, also is adviser to the Emerald Funds, a mutual fund family with $1 million in total net assets. NationsBank sponsors the Nations Funds family, which has about $15 billion in total net assets.
NationsBank would like to see Barnett's clients migrate to NationsBank's multiproduct manager, TradeStreet Investment Associates Inc., Charlotte, which handles about $53 billion in domestic equity and fixed-income investments.
TradeStreet President Holly Deem said discussions are being held with Barnett Capital clients and portfolio managers.
Donna Terry, Barnett Capital's chief investment officer, left the franchise this month. Sources say TradeStreet has made offers to several of Barnett Capital's lead portfolio managers, but no final announcements have been made regarding who will remain onboard.
One source said NationsBank was particularly interested in Barnett's small-capitalization growth equity team. The small-cap group was successful recently, posting a 20% return for the quarter ended Sept. 30, according to the Pensions & Investments' Performance Evaluation Report. The median small-cap growth equity return for the PIPER universe for that same period was 17.4%.
No liftout yet
So far, there has been no investment staff liftout from Barnett as there was last year when NationsBank acquired St. Louis-based Boatmen's Bancshares Inc.
At that time, the fixed-income team from Boatmen's investment arm, Boatmen's Trust Co., said they became discouraged with NationsBank's reluctance to share specific future plans.
When NationsBank discovered that Boatmen's fixed-income assistant chief investment officer, Frank Aten, was considering forming a new firm, he was dismissed. Portfolio managers were given the choice of going with Mr. Aten or staying with NationsBank. Mr. Aten and seven members of the fixed-income team moved to new offices in St. Louis, where they manage about $500 million in institutional assets as Rockwood Capital Advisers.
Originally, Boatmen's Trust had offered both equity and fixed-income investment management. After the merger, the equity investments of clients that remained were transferred to TradeStreet. The fixed-income division was salvaged by NationsBank, renamed Boatmen's Capital Management Inc. and is run by Boatmen's former chief of fixed income.
Ms. Deem said NationsBank hopes to have the Barnett Capital transition path worked out in the next few months.
Staff departures and other changes are part of the digestion of one entity by another, said Peter J. Succoso, practice leader, Spectrem Group, a consulting and merger and acquisition company in San Francisco.
Charlotte-based NationsBank acquired Barnett in a deal valued at $15 billion. The transaction closed Jan. 9.
Turnover at top
Mr. Succoso predicts the board of directors for the Emerald Funds will select NationsBank as the adviser in place of Barnett Capital. However, investment management is a personal business and Mr. Succoso warned that acquirers must handle transitions carefully or there is a chance of lost business.
Ms. Deem was promoted to president of TradeStreet after the November departure of Andrew Silton. She had been managing director of client services.
Both Ms. Deem and Mr. Silton moved to TradeStreet from NationsBank's trust and investment management division in 1995 when NationsBank created TradeStreet. Bank officials say Mr. Silton left to seek other opportunities. Mr. Silton said numerous management changes during his nearly four-year tenure with the bank made it difficult to create the culture in which TradeStreet could thrive.
NationsBank has given former Boatmen's Trust Chairman Martin "Sandy" Galt III responsibility for all investment management activities in NationsBank's Asset Management Group and has made him chairman of the investment policy committee for the group. In addition to overseeing TradeStreet and Boatmen's, Mr. Galt will be in charge of NationsBank's other investment management subsidiaries - Sovran Capital Management, Richmond, Va., a fixed-income manager with $4.9 billion in institutional assets; and Gartmore Global Partners, Charlotte, N.C. and London, an international stock and fixed-income manager with about $76 billion in total assets, $57 billion of which is in institutional money. Gartmore is a joint venture between Gartmore Investment Management PLC and NationsBank.
Mr. Galt is taking the place of John Munce, who was moved to another division of the bank. Owen "Bob" Shell continues as president of the Asset Management Group.
