HeadClerk's Blog

The title seemed catchy and at least the bulk of this entry is about TD Ameritrade. Being a fan of the TV show "Law and Order" I feel that Ameritrade has a good marketing campaign. Many don't though.

TD stands for Toronto Dominion or something close to that. Canadian investment banking group; big money, like HSBC is Hong Kong Shanghai Banking group, or something close to that (with foreign companies who knows what the acronym names really are with SA instead of NA or Inc).

Are people serious that Schwab or E-Trade would seriously consider that option as viable? Have hedge fund managers turned into morons (doubt it)? I was going for sushi the other day (i.e. the title of this article) and I saw a building with TD Ameritrade across the street from a Schwab and I had some thoughts.

In retail banking a company like Bank of America takes over a little bank or credit union for the leases (the people are nice to get with their relationships too), but in the end it is the buildings and the locations and the safe deposit box clients which like having good locations to go take the rings out of the vault.

In the self-service and online markets where these E-Trade and TD Ameritrade, among others, compete it isn't location they are after so much as clients or economy of scale. Schwab and E-Trade can steal clients all day by offering free or nearly free trades, so it wouldn't be about the client stealing (they can steal from clients on their own). Economy of Scale wouldn't really help either Schwab or E-Trade that much either when considering a TD merger (do the math, argue about this if you want but I have a few spreadsheets if you really want to argue excessively).

The groups that really should buy TD Ameritrade are Union Bank of California (UB) or City National Bank (CYN) or SunTrust Banks (STI). These are large but still mainly regional banks that would like to break into the national scene. Neither has a huge number of online trading clients; comparatively. TD Ameritrade has a full range of clients that could benefit from cross-sell opportunities for products such as lending, trust services, etc.

The sushi was good, I want to remind you that I don't own any of these stocks though mutual funds I own might and I am too lazy to check, see Rule Number 1 of my blog for any questions about this.

Wells Fargo (WFC) is buying Greater Bay Bancorp (GBBC) unless someone else has a better offer. How did a hedge fund or private equity genius miss that deal or let it happen?

At first glance, it looks like a big bank buying a smaller bank to have a better or bigger presence in a market they already almost completely dominate. If you left it at that you would think that this HeadClerk person should just take a nap.

Greater Bay does have an insurance company, ABD Insurance and Financial Services (ABD), which focuses mainly on commercial insurance; interest still not piqued? Greater Bay also has Matsco and a Treasury division and lots of fun little pieces. The Matsco division is a or the main lender for dentists and veterinarians, target clients for groups like Merrill Lynch or Morgan Stanley which might like to lend their retail investing clients money as well as handle their investments.

Why doesn't Lehman Brothers, or some other big investment bank, make a better offer for Greater Bay (GBBC), break out the divisions into separate groups like Community Banking, Commercial Lending (Matsco et al.), Commercial Insurance, and Real Estate Lending and sell the pieces separately? They could then sell the Community Banking group to Wells Fargo or some other non-California bank that wants branches in the West? They could sell the lending group to someone like ABN Amro or someone else, and the Insurance group to AIG or that type of company. It just seems that a Northern California bank that has a more than 72% of it's non-real estate lending clients outside of California should be opened up to more players than the stage coach and company.

I don't own Greater Bay stock in case you are wondering, but mutual funds I own might own Wells Fargo or other companies mentioned herein so see Rule 1 of my blog.

In grad school I wrote a paper explaining why it made sense for Wells Fargo to "merge with" Bear Stearns. If I took out the names and replaced them with Wachovia and AG Edwards I would be a fortune teller. I would have to replace West Coast with East Coast also, but almost everything else made sense.

Recently, Citigroup merged Smith Barney and Citicorp Investment Services (the broker-types in the bank branches) and actually didn't bungle it too badly. This was an example of a great brokerage firm like Saloman Smith Barney (Saloman got canned when Citi came in years ago) showing that they can have Financial Advisors in a branch working for the same firm as the guys from the wire house (named that because they used to get their information via a proprietary wire before the Internet and not because they killed their competitors with a wire around the neck like many believe).

Wachovia Securities had already been moving that direction on the East coast of the USA (having broker-types in banks and in non-bank offices as well), but with the merging of Wachovia Securities and AG Edwards as well as the West Coast expansion of Wachovia Bank to California with the purchase of World Savings et al they can do it also (or they can show how to really fub it up like Citi did when they bought Cal Fed Bank in California).

What does this mean for the clerks of the world? More later...

Wouldn't you? Anything with Gold in the name has to be better, doesn't it?

Kinder Morgan, JP Morgan, Morgan Stanley; all great companies, but without that catchy 'gold' sound they just don't seem to have that bling. Who is that Morgan guy anyway? (If you don't know the answer to that please don't post letting me know who it is after you figure it out).

Bank of New York, Bank of America, Bank of La Jolla; who wants to work for a bank? It seems that MBA's do as long as there is the word 'gold' in the name.

For those of you that think this is all fun and typing I just lost a really funny seven (7) page blog entry by hitting a dumb button. Give us a break once in a while.

This is a hello to all you that keep saying I should start a blog. I doubt anyone should really want to read a blog by a Head Clerk, but what do I know?

For those of you that like to read things like this, rule number 1 (one) is never take advice from someone who won't tell you there name. Feel free to call me head clerk, moron, or anything you want; the people that have my work email address are the only one's that matter in the long run anyway.

The info here is for general use and not to direct your savings, retirement planning, or corporate acquisitions. If you use this info for a LBO (leveraged buy out) I do charge a nominal fee payable in Starbuck's gift cards.