When the Firstar Corporation of Milwaukee completes its acquisition of U.S. Bancorp of Minneapolis, the combined asset management unit will have approximately $50 billion in mutual fund assets under management, according to Strategic Insight of New York. So what can be expected once the merger is completed? Further expansion, according to Thomas Schreier, the asset management unit's newly-appointed CEO.
"I think we have some great advantages that can drive some substantial growth," said Schreier. "There are two core elements to what we want to accomplish. First, we need to service our existing clients in the same way we've done all along. Beyond that, there's no question that given our new size, we clearly have the scale for substantial growth.
"The main avenue for growth I see being there is taking the existing products and putting them across the greater footprint," he said. More specifically, he plans to sell Firstar products through the Piper retail brokerage channel and use the Piper name on those products.
"Things like that can drive substantial growth since the companies are complementary across both [groups of] products," Schreier said.
The U.S. Bancorp acquisition of Firstar, which was announced on Oct. 4 (MFMN 10/4/00) is expected to be completed in the first quarter of this year. While Schreier expects the consolidation of companies to provide opportunities to expand the business, he knows it brings certain challenges as well.
"We have to create one culture with two organizations," he said. "That's a substantial challenge and I think will take some time to develop."
The first thing Schreier plans to do to build that culture is chose leaders from both companies who "know both cultures," he said. Apparently, he already has some of these people in mind.
"From being here, I know that there are certain people that would bring cultures and attitudes that would work well in combination," he said.
Often, when asset management companies join, there is an overlap of funds in terms of sectors and investment objectives and that often leads to fund mergers or liquidations.
"I anticipate some of that, but not really a lot at all," said Schreier. "There's actually a lot more interlocking than overlap."
Recently, Piper Capital Management, a unit of U.S. Bancorp Piper Jaffray, was sanctioned as a result of allegations brought by the Securities and Exchange Commission stemming from the 1994 collapse of the Piper Jaffray Institutional Government Income Portfolio (MFMN 12/1/00). An administrative law judge found the fund guilty of violating the Securities Act by deviating from the fund's investment objective and failing to disclose that deviation as well as several facts about the fund's composition from 1991 to 1994.
"That precedes me," said Schreier. "I'm not going to comment on it."
Schreier, 38, has been senior managing director and head of equity research in the equity capital markets division of U.S. Bancorp Piper Jaffray of Minneapolis, Mn., a subsidiary of U.S. Bancorp. Over the past two years, Schreier has helped to nearly double the number of senior research analysts at the firm as well as generate large increases in revenues. In 1999, equity capital markets increased revenues 100 percent over 1998, and this year it anticipates another 70 percent increase, according to Schreier.
"Under Tom's leadership, we have aggressive plans to grow the division into a leader among asset management firms," said Andrew Duff, vice chairman of U.S. Bancorp and head of the U.S Bancorp wealth management and capital markets division. Schrier will serve on the management committee of that division along with Duff.
"Tom has a track record of developing a leading business and attracting top level talent," said Duff.
"That track record is one of the biggest positives for me to have success in the new position," said Schreier. "At the end of the day, I think any business like this is driven by its talent. If you can create an environment that is performance oriented and that compensates on performance, you can have success. I know there's a pretty intense war for talent, but if you create the right environment, you can bring in some great talent."
Also, during his time with equity capital markets, Schreier helped expand the geographic reach of the division. The unit began with offices in Minneapolis and Seattle and opened offices in New York, San Francisco, Boston, Menlo Park, Calif., and Tel Aviv, Israel under Schreier's leadership, said Schreier.
"We've greatly expanded the reach of the business, which clearly helped us serve our clients and reach out to new ones and expand," he said.
Before joining U.S. Bancorp Piper Jaffray in 1998, Schreier was senior airline equity analyst and a director in the equity research department of Credit Suisse First Boston. The Wall Street Journal named Schreier the number one airline analyst in the country for 1997 and 1998 and Reuters of London ranked him the number one small and mid-cap transportation analyst and the number four large-cap transportation analyst for 1998, according to Susan Curran, a spokesperson for U.S. Bancorp Piper Jaffray. Before joining Credit Suisse First Boston, Schreier was vice president of finance for Northwest Airlines of St. Paul, Minn. from 1988 to 1995. He received a B.A. in economics and German from the University of Notre Dame in 1984, and an M.B.A from the Harvard Graduate School of Business in 1988.
Schreier is confident that his years in equity research and analysis will benefit him.
"In one stage of my career, I was a customer of this business," he said, referring to his time at Northwest Airlines. "I know what it's like to be a customer of the mutual fund business and I think that it is hugely important for success in managing within the industry.
"What I've learned over the years will hopefully help me take on this challenge and have success here."