Salomon Smith Barney has quietly formed partnerships with 65 small, unaffiliated banks. In the past two years, the firm has opened miniature "investment centers" inside the banks.
The goal is to expand SSB's market presence without spending money on bricks and mortar, says Doug Van Scoy, private client group deputy director. About 70 full-time SSB brokers now work in small-bank branches nationwide.
Van Scoy says the bank-based reps don't compete against SSB brokerage offices. "These are clients we wouldn't normally see in the course of our business," he says. "Our experience in the past is that we've had very few conflicts."
SSB formed one of its most recent partnerships in June when it opened an investment center inside the main branch of MountainBank in Hendersonville, N.C. SSB hopes to establish another 15 or 20 alliances this year.
The partnerships work in one of two ways: When a bank already has registered reps in its branches, those brokers go through SSB's training program and become full-time employees of SSB. In other cases, SSB places a willing rep from a retail branch in the bank location.
In both cases, brokers are encouraged to "build their own books" and have clients beyond bank customers, Van Scoy says.
The manager of SSB's closest retail branch supervises the one- or two-broker bank investment centers.
Although SSB will continue to look for local banks with which to partner, teaming with sister company Citibank is not likely, according to officials.
"We're looking at a lot of issues there," Van Scoy says. "We just don't know" if an SSB-Citibank arrangement will happen.
Although SSB has taken control of Citibank's investment center in San Juan, Puerto Rico, combining domestically doesn't make much sense because Citibank branches are located mainly in large cities where SSB already has offices.
"The whole reason for this program is to be where we aren't," Van Scoy says. Citibank's 371 bank branches have their own sales force of 492 "financial executives," according to a firm spokesperson.
Smaller regional banks are eager to partner with SSB so they can offer clients a broad range of investment services using a widely recognized name. When a new center is preparing to open, banners are draped across the bank that read: "Coming soon: Salomon Smith Barney Investment Center."