Question for New Regions: Morgan Keegan Autonomy
Davis, Paul, American Banker
As Regions Financial Corp. integrates AmSouth Bancorp., some insiders and outsiders are thinking about how a management team made up mostly of former AmSouth executives plans to handle Morgan Keegan & Co. Inc., the investment banking unit the old Regions brought to the union.
The old Regions largely had granted Morgan Keegan autonomy since buying it in 2001. That management style endured even after the Birmingham, Ala., banking company's 2004 acquisition of Union Planters Corp. of Memphis, and against a backdrop of failed marriages between other regional banks and investment banks.
But C. Dowd Ritter, the former chairman, president, and chief executive officer of AmSouth and now the president and CEO of the new Regions, historically has favored a centralized banking model.
Some former Morgan Keegan employees say insiders who have spoken with them are wondering what Mr. Ritter will do with the investment banking business, a line that largely did not exist within AmSouth.
G. Douglas Edwards, Morgan Keegan's president and CEO, conceded in an interview Tuesday that the new management team has "an approach that is different" from the previous one. "It's a little bit of a change for us ... so it takes some getting used to."
So far interaction between the AmSouth veterans and Morgan Keegan has been "limited," though it is increasing, he said.
Morgan Keegan will "be flexible" in dealing with the new management team, Mr. Edwards said. "These things are never easy ... and this is the second go-around for us," after the Union Planters purchase. "We certainly haven't had any points of friction," and the new executives have been "easy to work with."
Regions said Mr. Ritter was not available for comment Wednesday, but the company reiterated comments he made in an interview last month when the $10.5 billion AmSouth deal closed. At that time Mr. Ritter discussed a number of potential synergies involving Morgan Keegan, and he said that his company would work to open Morgan Keegan offices within former AmSouth branches, particularly in Florida.
He also said that AmSouth's trust operations would be brought under Morgan Keegan's operations.
For now, Jackson W. Moore, the old Regions president and CEO and the new Regions chairman, is overseeing Morgan Keegan. However, according to the merger agreement, if Mr. Moore, 57, were to retire or resign before the third anniversary of the merger, Mr. Ritter, 58, would become the new Regions' chairman.
Several former employees say insiders are watching to see whether the new Regions will try to chip away at Morgan Keegan's autonomy.
Kevin Reynolds, an analyst at Stanford Equity Group in Memphis, said in an interview Tuesday that the situation is "interesting to watch." Even though there appears to be no immediate plans to bring Morgan Keegan under closer corporate oversight, it could happen if the unit "starts to struggle a little bit. …