Reverse Spin: Schwab to hold more manicured hands

For a company that doesn’t like to think of itself as competing with financial advisers, Charles Schwab Corp. is certainly going after the rich and, sometimes, famous.

On Wednesday, the San Francisco discount broker said it would pay $365 million for the private-asset-management business of Boston-based State Street Corp. The deal, which had been rumored for months, is part of Schwab’s effort to cater to wealthier clients.

The unit, which employs about 180 people, manages roughly $11.5 billion for wealthy individuals in New England. The deal will allow State Street to focus more on its institutional clients.

“This business is more oriented to the consumer, a business line that State Street is moving away from. So we think, in the long run, this deal will benefit State Street,” said Gerard Cassidy, an analyst in Portland, Maine, with RBC Capital Markets.

For a rainy day

* The boom in bond trading isn’t going to last forever. So a big bond trading house such as New York’s Lehman Brothers Holdings Inc. is going to need a new source of revenues when the party is over.

Richard Bove, an analyst at Hoefer & Arnett Inc. in San Francisco, reportedly said that’s the reason why Lehman is making a $3 billion bid for Neuberger Berman Inc., also of New York. Neuberger’s asset management business would add diversification and earnings to Lehman’s business.

One analyst estimated Neuberger’s potential contribution to Lehman’s bottom line next year at 22 cents a share.

Morgan Stanley adds muscle

* Looks like Morgan Stanley is serious about beefing up its flailing asset management business. The New York-based brokerage house Tuesday announced that it had hired William Ennis as president of global services.

As chief executive of Charlotte, N.C.-based Evergreen Asset Management Corp. – the asset management arm of Wachovia Corp. – Mr. Ennis earned the respect and admiration of many by increasing assets in the midst of a bear market.

During his nearly 10-year tenure at Evergreen – initially a part of First Union Corp. – the firm’s mutual fund assets grew to about $115 billion, from around $3 billion, according to data from Financial Research Corp. in Boston.

Industry observers say Mr. Ennis was probably hired to work the same magic at Morgan Stanley Investment Management, which since 2001 has increasingly seen assets go out its doors.

Chad Peterson, a spokesman, said Evergreen has no plans to fill Mr. Ennis’ position, “due to the strength of our existing team.”

Vested interest

* If John Hancock Financial Services ever gets sold, you can bet at least five of its executives will be just dying to get their own John Hancocks on the deal.

According to a report in The Boston Globe on Wednesday, the top five executives of the Boston insurer stand to pocket a cool $116 million if the company is sold.

Hancock has long been viewed as a viable merger or acquisition candidate and is widely believed to have engaged in high-level merger talks as recently as this spring with its neighbor FleetBoston Financial Corp.

The executive that would benefit the most is none other than David F. D’Alessandro, who was recently the subject of some criticism because of the hefty $21 million in compensation he received last year.

If a deal were to happen, Mr. D’Alessandro could rake in nearly $61 million in stock and cash, at current stock prices.

Closing Quote

“My belief is that the bond market today is where the Nasdaq was when it was [at] 5000.”

– Investment strategist Byron Wien, on shortening durations of bond holdings. Page 5