Magazine article American Banker

Capital Markets Pullback at Big Regional Banks

Magazine article American Banker

Capital Markets Pullback at Big Regional Banks

Article excerpt

The efforts of large banking companies to divert resources and attention from capital markets activity are reaching a new level of intensity.

With first-quarter profits hit by a slowdown in brokerage and investment banking, several large banking companies supplemented their earnings statements with announcements that either disclosed or elaborated on plans to cut back capacity in those businesses.

FleetBoston Financial Corp. and U.S. Bancorp on Tuesday released earnings reports that included costs to restructure their investment arms, which have suffered sharp declines.

Revenues in U.S. Bancorp's capital markets businesses were down by about $100 million from a year earlier. The company said it absorbed $23 million of first-quarter charges to restructure its U.S. Bancorp Piper Jaffray and to "improve the operating efficiency of the individual businesses by removing excess capacity from the product distribution system."

Capital markets business contributed $35.7 million of its pretax operating income in the first quarter, down 50% from a year earlier and 27.6% from the fourth quarter.

Fleet took $50 million in charges related to restructurings at Robertson Stephens & Co., its San Francisco investment bank, and Quick & Reilly Group, its New York brokerage operation.

Eugene McQuade, Fleet's chief financial officer, said that about 80 jobs have been eliminated at Robertson Stephens, and that up to 500 could ultimately get chopped at the two units. …

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