Randomly Noted

Sometimes, when you get yourself into a little trouble, it forces you to do some things you may not otherwise have done. Take the case of BankAmerica. Through various mergers over the years, it built up a pretty sizeable asset management division which became known as Columbia Management. But then along came the credit crisis, and some problematic acquisitions that weighed on BankAmerica. It had to raise capital, so, it sold Columbia to Amerprise Financial for $1 billion.

Today, Ameriprise reported second quarter earnings and it showed some good profit numbers in its asset management business, which had two months of Columbia’s performance included. The unit earned $56 million this quarter versus a loss of $12 million in the year-ago quarter. By no means was this the unit powering all of Ameriprise’s earnings (insurance, annuities and wealth management all had higher profits.) But it is clearly a profitable business, one creating millions of dollars of cash for Ameriprise – money you have to wonder if BankAmerica is now regretting it doesn’t have.

A firm like Morgan Stanley really operates in four basic businesses – wealth management, asset management, investment banking and sales & trading. The segment that offers the most volatility in terms of earnings/sales flow from quarter to quarter in sales & trading. And that’s exactly the segment that powered Morgan Stanley to a strong earnings showing today. And which likely led CEO James Gorman during an analyst conference call to temper expectations for the rest of the year.

The strongest area for Morgan Stanley in sales & trading came from equities, where the firm had $1.415 billion in revenues, essentially flat over the quarter before. But the firm believes it took market share from its rivals. Other highlights were in commodities trading and in its prime brokerage business. Its foreign exchange business saw higher revenues on “increased client flows.” This is the part of the forex business where Morgan Stanley executes, among other things, hedging strategies for customers like companies looking to minimize forex exposure.

Morgan Stanley did not give a lot of detail or color to any of its troubled asset portfolio other than to say it had net mark-to-market losses of $277 million. It didn’t say what kind of securities led to those losses.

Welcome to the big leagues, Ameriprise Financial.

Already one of the largest financial advisory firms in the U.S., Ameriprise today became one of the largest asset-managers as well with the acquisition of Columbia Management’s long-term fund business from Bank of America. (It didn’t buy the money-market funds business).

Ameriprise is picking up an asset management busiess that appears to be on the mend. Net outflows from Columbia’s equity business are slowing and there have been net inflows on the fixed-income side. (See flow charts below)

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Ameriprise Financial is looking to take advantage of other firms’ problems. The sleeping giant in the financial planning world (it has about 10,000 advisers) is looking to expand in that bread and butter business and asset management, Newswires’ Jessica Papini reported earlier today. It’s a great time for one of the healthier financial services companies to do something like that. We’ve already seen Citigroup, desperate for capital, sell of a big stake in its Smith Barney business to Morgan Stanley. Merrill Lynch got thrown into the arms of Bank of America.

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