Alex. Brown's vanishing could be bad blow to city Other local firms have gone, but this one has been here 'forever'

April 07, 1997|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

With the announcement that Alex. Brown Inc. will merge with a New York investment firm, Baltimore suffers perhaps its biggest casualty in its seemingly never-ending battle to retain corporate headquarters.

By merging with Bankers Trust New York Corp., the nation's oldest investment firm tops a long list of leading and once-invulnerable corporations whose headquarters have vanished from the city and the region, the result primarily of sweeping economic forces beyond their control.

But Alex. Brown, whose $1.7 billion corporate marriage with Bankers Trust stems from a desire to compete better on a global scale in the modern ultra-fast world of investment banking, may be the most devastating and irreversible loss.

"Theirs is a name that has been associated with Baltimore forever," said James T. Brady, secretary of the state's Department of Business and Economic Development. "It's hard to assess the impact that this will have on the economy until an analysis has been done, and hopefully it won't result in a huge job loss."

Although Alex. Brown, which employs more than 1,000 downtown and in Timonium, said it was too early to speculate on specific job eliminations, past mergers of banks and financial services firms historically have resulted in employee cuts averaging 30 percent.

"Emotionally, there is a tremendous sense of loss, of pain," said Alex. Brown Chairman and Chief Executive A. B. "Buzzy" Krongard.

While the losses since 1987 of local headquarters belonging to Monumental General Corp., MNC Financial Inc., Baltimore Bancorp., PHH Corp., UNC Inc., CSX Corp., Jiffy Lube International Inc., Merry-Go-Round Enterprises Inc. and Loyola Capital Corp. have been significant, none may be more shocking -- or damaging -- than Alex. Brown.

And not just because Alex. Brown had been in business for nearly 200 years, or that the firm consistently ranked as the city's largest corporate United Way donor, or that its rich history included importing goods here from Ireland and Europe and bankrolling -- and essentially creating -- the Baltimore & Ohio Railroad.

The departure of Alex. Brown's headquarters could be the most damaging because the company had been so fiercely independent. Its loss means other apparently stable and strong Baltimore firms could be vulnerable to being swept up by larger competitors, analysts said.

"I'm surprised. I thought they had a niche that would have prevented the need for a merger," said Anthony W. Deering, the Rouse Co.'s chairman and chief executive.

"We've had a relationship with Alex. Brown since we went public in 1956," Deering added. "But with all that's going on in financial services these days, I'm not shocked."

The news that Alex. Brown would abandon its independence is especially surprising in light of a corporate consolidation into a 30-story skyscraper at 1 South St., completed in February. Despite a lease commitment that ties the company to the $90 million building through 2012, Alex. Brown could gradually scale down its presence there, in the same way that CSX has been slowly relocating its headquarters to Jacksonville, Fla.

"We're not the only city that has had a problem losing company headquarters, because mergers have affected a lot of cities and companies that have had a strong community presence," Brady said. "But Baltimore has been hit hard, and we need to work harder to see that corporations continue to focus here."

Pub Date: 4/07/97

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