JOINING IN A PRIVATE FIGHT
Eating the lunch of the investment banks, and nibbling one more hole in the Glass-Steagall Act, the commercial banks are going hungrily after the private placement market.
"I've seen strong inroads by the commercial banks in private placements,' said David Bullett, a senior vice president of Teachers Insurance, which invested $1.5 billion in private placements this year. "Two to three years ago, 5% of our business came from commercial bank referrals. Today, it's 20%.'
He added that the business was not coming just from money centre banks. Regional banks--North Carolina National Bank, Mellon and Bank of Boston--are also calling up with deals. And such banks are no longer thinking small.
"They are doing deals in the $100 to 200 million range, and that's what we're chasing after,' said Ralph Fletcher, who heads private placements at Salomon Brothers.
At the biggest US money centre banks, private placement is the cornerstone of an evolving capital markets strategy, aimed towards fee-based business. Neil Powell, who heads the effort in this direction of Bankers Trust, said: "Private placements form the lynchpin of our overall strategy to become a global merchant bank, and this is a good barometer of how well we are doing overall.'