By Elizabeth Hester
July 31 (Bloomberg) -- When Michael Nolan walked into his office on the 26th floor of the former Bear Stearns Cos. building on June 2, after the JPMorgan Chase & Co. takeover was completed, he found a packet on his desk. Inside: a JPMorgan security badge, a list of contacts and business cards that read, ``Bear Stearns: a JPMorgan Company.''
Nolan, 52, and 325 other Bear Stearns retail brokers will carry on the name after a crisis of confidence among customers and lenders forced the investment bank to sell itself to JPMorgan in March. Alan ``Ace'' Greenberg, Bear Stearns's best- known trader and its former chairman, will continue selling stocks to clients, 59 years after joining the New York-based company as a clerk.
``I'm thrilled the name lives on,'' said Nolan, who joined Bear Stearns in 1991. ``I believe in branding, and I don't see a reason to kill it after 85 years of building it.''
Keeping alive a vestige of the securities firm founded in 1923 by Joseph Bear and Robert Stearns is more than just nostalgia, said Charles Geisst, the author of ``100 Years on Wall Street,'' who teaches finance at Manhattan College in New York. Just as Citigroup Inc. hung onto Salomon Brothers for five years, and UBS AG retained PaineWebber for almost three, the brand may help keep clients.
``JPMorgan is not known for brokerage,'' Geisst said. ``As a result, you want to keep the name that signifies brokerage, and that, of course, is Bear Stearns.''
Staley's Turnabout
Bear Stearns, previously the fifth-largest U.S. securities firm, had more than 500 retail brokers. The wealth management division booked $830 million of revenue in 2007, 14 percent of the firm's total. JPMorgan didn't have a retail brokerage prior to the purchase, and Jes Staley, 51, who runs the bank's asset management unit, said in December that he wasn't interested in running such a business.
Some of the Bear Stearns brokers who joined JPMorgan shunned offers of as much as $2 million from competitors including UBS, Merrill Lynch & Co. and Morgan Stanley, executive recruiter Mindy Diamond said in March.
They chose instead to join the third-largest U.S. bank by assets, which has managed this year's market turmoil better than rivals. Led by Chief Executive Officer Jamie Dimon, JPMorgan recorded $12.8 billion of net losses since the beginning of last year. Bank of America Corp., the second-largest lender, posted $21.2 billion of losses in the same period.
Brokers were also lured by the opportunity to sell JPMorgan's bigger range of investment products, such as private- equity and hedge funds, said Barry Sommers, 39, who oversees the Bear Stearns unit.
`Entrepreneurial' Culture
Sommers, along with Staley and Mary Erdoes, 40, chairwoman of wealth management, visited Bear Stearns's six brokerage offices outside New York -- in Boston, Atlanta, Chicago, San Francisco, Dallas and Los Angeles -- after the deal was announced. They assured workers that the Bear Stearns ``entrepreneurial'' culture would persist, Sommers said.
``The strategy is to keep the culture intact, but tap into the products at JPMorgan,'' Sommers said in an interview.
The Bear Stearns brokers remain a separate division from JPMorgan's private bank, whose clients are typically worth more than $25 million. They'll be kept on a commission-based model, not the salary and bonus pay structure of private banking, Staley said in an interview.
JPMorgan plans to keep the business small, growing to a maximum of 1,000 brokers, Staley said. Merrill Lynch, the world's biggest brokerage, has a team of 16,690.
Best, Not Biggest
``My philosophy is, seek to be the best and don't confuse being the best with being the biggest,'' he said. ``What we want to do is improve on the quality of our brokers, maintain their business model, but give them access to the products of JPMorgan.''
The Bear Stearns unit collected revenue of $38 million in the second quarter, its first as a division of JPMorgan. That was less than 2 percent of the entire asset management unit's intake of $2.1 billion. Assets under management were $8 billion.
It's dwarfed by Citigroup's Smith Barney unit, one of the few Wall Street names that wasn't retired after a takeover. Smith Barney's 15,000 brokers had $2.7 billion in revenue for the second quarter. At Morgan Stanley, net revenue including private banking was $2.4 billion in the quarter ended May 31.
``Ace'' Greenberg, the 80-year-old former Bear Stearns CEO, will be paid 40 percent of the commission revenue he generates from clients in his new post at JPMorgan, according to an April regulatory filing. Greenberg declined to comment.
Bear Stearns's Nolan said he was less interested in jumping ship to a bigger company than staying at a firm that would allow him and his team to keep expanding. So far this year, the group's revenue is up 21 percent from last year, he said.
``I'm looking to do what's best for my clients and what's best for my team,'' Nolan said. ``I feel like I have on a new jersey and am back on offense.''
To contact the reporter on this story: Elizabeth Hester in New York at ehester@bloomberg.net.
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