CHICAGO - Salomon Smith Barney Inc. stays number one among underwriters year after year for a few simple reasons -- it takes municipal finance seriously, its people are experienced, and everybody gets along, according to company officials.
"The sense of partnership we've created in the municipal securities division is the reason it has succeeded as well as it has over the years," said Ward D. Marsh, managing director and head of municipal finance at the firm.
Marsh noted that at some firms, there is a division of interests between the investment banks and the capital markets, between retail and institutional, or between regional bankers and product specialists.
"Our success centers around the ability to draw everybody around one table," Marsh said.
Salomon Smith Barney has ranked first among senior managers nationwide for all municipal bonds since 1997, beating back strong competition from the expanding UBS PaineWebber, according to Thomson Financial Securities Data. In the last quarter, Salomon widened its lead, taking a 15.3% share of the market as leading senior manager, up from 12.4% in the first quarter of last year.
Salomon Smith Barney also took top honors in both negotiated and competitive underwriting.
Outside observers agreed that the firm's strong team and dedication to the market have helped push it to the top.
"The reason PaineWebber and Smith Barney are so successful is that that have a great ability to make sure everybody gets along with one another," said one market participant. "Historically speaking, at some other firms, the institutional people don't get along with the retail people and the sales people don't get along with the underwriters."
"They've got a lot of good people, a big staff, big infrastructure, and trading capabilities, and they're very aggressive," noted another market source. "That's a pretty strong combination."
Asked to contrast Salomon to other firms, the source noted, "The big difference I see is that there's never been a hesitation about dedication to public finance. At some other institutions, there's been a little bit of ambivalence."
Marsh noted that the muni division at Salomon Smith Barney has remained a dominant player, despite all the changes the firm has undergone over the years. Those changes include Smith Barney's mergers with Salomon Brothers, Shearson, and Citibank.
It also stands apart from other Wall Street firms in that the municipal finance division reports directly to the CEO. Company officials noted that the divisions revenues have grown every year, which helps the division stature.
Frank Chin, managing director and head of the public finance department, noted that the firm's high rankings in public finance also doesn't hurt the division's status. "We're viewed as a solid contributor," Chin said.
REGIONAL STRENGTH
Peter Bartlett, managing director of municipal trading and sales, said Salomon Smith Barney has a distinctly regional approach.
The firm concentrates its forces in eight different regions in the country -- California, Florida, Chicago, Atlanta, New York, Philadelphia, Dallas, and Seattle -- the same regions it has served for more than 20 years.
The firm also tries to be comprehensive in its approach to the institutional market, Bartlett said.
"We've tried very hard in the last two or three years to improve our relationships with up to 250 institutions," Bartlett said.
"They're good at making a competitive market," noted Richard Ciccarone, co-head of fixed income investments at Van Kampen Investments, in Northfield, Ill.
"They have experienced sales and trading teams and they're been known for their market research -- those are the right characteristics that help make a company come to the forefront."
Company officials agree a strength lies in the longevity of its professionals. Chin said many of his bankers have been at Salomon Smith Barney or its predecessor 15 years or more, "which is pretty unique on the Street."
"They have strong interpersonal relations as well, which I think helps stabilize the department in good times and bad times," Chin said.
"We try to make it a positive environment," agreed Bartlett. "There's always people outside the firm complaining about the status of the muni bond business -- that it's a mature business with not enough spreads. People working together with a positive attitude has helped us through some difficult markets."
Company officials said the bank is trying to keep its lead through such recent initiatives as a diversified expansion in the derivatives area, as well as its work on difficult project revenue bonds and high-yield bond projects, and non-traditional debt issues such as tobacco bonds.
"We try to stay on the cutting edge of finance," Bartlett said. The firm is "very respectful of the competition" in a tough market, he said, adding: "Every day we come in with the goal of trying to compete."
