Magazine article American Banker

Merged Brokerages Say Independence Is Harder as Banks Gain Power

Magazine article American Banker

Merged Brokerages Say Independence Is Harder as Banks Gain Power

Article excerpt


It is possible for a midsize brokerage firm to stay out of the merger fray, but it is not easy. So say two regional brokerage executives who recently sold their firms to large banking companies.

"Banks will increasingly take market share away from the industry," said Marshall B. Wishnack, chairman and chief executive officer of First Union Capital Markets Corp. Mr. Wishnack headed Richmond, Va.-based Wheat First Butcher Singer & Co. before selling it to First Union in February 1998.

Speaking on Tuesday at a meeting of the Securities Industry Association, Mr. Wishnack said the competitive environment is only going to get more challenging, and banks will continue to steal the thunder of independent brokerages.

William B. Summers Jr., chairman and chief executive officer of McDonald & Co. Investments Inc., agreed.

"Everyone would like to remain independent, but it is more difficult for a midsize firm now," he said. "There will always be room for niche firms, but the midsize firms occupy a tough position."

Mr. Summers sold McDonald & Co. to KeyCorp in October.

However, there is upside to the bank-brokerage combination, the two executives said.

Mr. Summers said he liked the close geographical and cultural fit between KeyCorp and McDonald. The brokerage's offices are just two blocks from the bank's headquarters in Cleveland.

But even the most advantageous marriage involves some risk.

"We are consolidating into a consolidating industry," Mr. Summers told conferencegoers. "For all we know, KeyCorp could be acquired, and we have no idea what that would mean for us down the line."

Mr. Summers said in a later interview that before he agreed to sell McDonald & Co. last June, he made a point of getting confirmation from the bank that no big merger plans were in the works. …

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