Deutsche Bank, Brown merger produces raves

Baltimore company lauded for role in record profit

Financial services

May 12, 2000|By Bill Atkinson | Bill Atkinson,SUN STAFF

NEW YORK - Rolf-Ernst Breuer, head of Deutsche Bank AG, said yesterday that the merger between the world's largest banking company and Alex. Brown Inc. has gone "seamlessly."

"We can say, `Well done,'" Breuer, spokesman of the group board of Frankfurt-based Deutsche Bank, said during a news conference at the company's offices in New York. "It went rather seamlessly."

Breuer said many skeptics expected culture clashes and mass defections, but they did not occur.

"One plus one really does equal three," said John Ross, chief executive officer of Deutsche Bank's American operations.

Deutsche Bank completed its acquisition of troubled Bankers Trust Corp. in June 1999.

The company wanted Bankers Trust partly because the New York-based bank had acquired Alex. Brown, a highly regarded investment banking company, in September 1997.

Alex. Brown, which has since been renamed Deutsche Banc Alex. Brown, employs about 1,500 in the Baltimore area. Breuer beamed yesterday while talking with reporters, many of them from European newspapers and television stations, because the results have been strong.

Deutsche Bank reported a record first-quarter profit, and Breuer said there is a "good chance" that results for the full year could be the best in the company's history.

Some of the credit goes to Alex. Brown, which has given the company a broader profit stream. Before the acquisition, about 20 percent of profit and revenue came from Deutsche Bank's American operations. Now, it is up to 40 percent, he said.

Breuer was also smiling because Alex. Brown blew away competitors with initial public offerings that gained an average of 92.1 percent from January 1999 to April 25, according to CommScan, a firm that tracks the IPO market.

Most recently, the company played a large role in several high-profile deals, including helping take AT&T Corp.'s Wireless Group public last month in the largest IPO in U.S. history.

"Alex. Brown offers a success story" in global markets and global equities, Breuer said.

He expects that Alex. Brown, founded in Baltimore 200 years ago, will be involved in even bigger IPOs, despite stiff competition. The AT&T deal is "a sign we are on the right track," he said. "We feel we can build."

Breuer said the firm brought Deutsche Bank "special expertise in investment banking," and that it has been involved in "fashionable things," such as taking high-technology, media and health care companies public.

But, said Breuer, Alex. Brown lacked global muscle until it became a part of Deutsche Bank.

"They had not the platform to expand to the other side of the Atlantic," he said. "We had that platform."

Mayo A. Shattuck III, co-chairman and co-chief executive officer of Deutsche Banc Alex. Brown, said the firm plans to expand in the United States and Europe. He said it seeks to beef up groups that follow telecommunications, energy, banking and insurance.

Deutsche Bank has been criticized for being slow to build its investment banking business, as well as for other fumbles. Last month, merger negotiations collapsed between Deutsche Bank and Germany's Dresdner Bank AG.

Breuer was asked why he did not resign in the wake of the failed transaction.

"I felt there was no reason to, quite frankly," he said. "A collapse of the merger deal is something you can never be proud of. As the English call it, we got egg on our face."

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