Alex. Brown OTC division going to N.Y.

Equity traders `like to be together,' Shattuck explains

No larger exodus planned

35 can join move

10 people are fired

several to stay here

March 07, 2001|By Kristine Henry | Kristine Henry,SUN STAFF

Deutsche Banc Alex. Brown Inc. will move its over-the-counter trading division to New York this summer, a move that means all position trading will be done outside Baltimore, company officials said yesterday.

About 35 OTC traders in the Baltimore office at One South Street will be offered jobs in New York. Several sales traders will remain here, and about 10 people were fired.

It will not be the first such move to New York for the company. In 1999, Alex. Brown moved its division that trades stocks listed on the New York Stock Exchange after its then-parent, Bankers Trust, was acquired by Deutsche Bank AG.

"Traders like to be together, in sight of one another," Mayo A. Shattuck III, co-chairman and co-chief executive officer of Deutsche Banc Alex. Brown, said yesterday.

He said that the OTC division - which trades stocks that are listed on the Nasdaq stock market - is doing "phenomenally well" and that in order to grow and attract the kind of talent it will need in the future, it made sense to consolidate the traders in New York.

The firm's OTC division was ranked 18th in the business in 1998 and now is ranked No. 9 or No. 10. Company officials declined to disclose the OTC division's revenue.

The move does not signal the beginning of a broader migration to New York and away from Baltimore, where about 1,400 people are employed, Shattuck said.

"I don't want this to be interpreted as Baltimore in isolation; it's still a very vibrant part of a large, global, successful organization that people are very proud of," he said.

Alex. Brown is the only firm of its caliber that does part of its equity trading outside New York, said David DiPietro, its head of North American equities. "It's a bit of an anomaly," he said. "Customers are surprised and people we're recruiting are surprised."

No other equity professionals will be affected by the move, DiPietro said. The Baltimore office will retain the private client business, asset management, investment banking and equity research.

The 10 people in the OTC division who were fired yesterday were escorted out of the building - standard practice for employees who have access to sensitive material. "It's not anything about their character," DiPietro said. "It's a matter of [federal] compliance."

"It was a relief to have been included, but there was more than a bit of anguish for our fellow colleagues," said one employee who was offered a New York position. "It was relief mixed with a hearty dose of sadness."

Alex. Brown, whose roots in Baltimore date to 1800, was acquired by Bankers Trust New York Corp. in September 1997 for about $2.5 billion. Deutsche Bank AG of Germany then bought Bankers Trust, including Alex. Brown, in June 1999 for $9 billion.

In January 1999, in anticipation of the Bankers Trust acquisition, Deutsche Bank closed its OTC trading office in New York with the idea of focusing that business in Baltimore. Officials are now reversing course as they try to beef up recruiting and consolidate operations.

Shattuck said OTC trading wasn't moved to New York earlier because the firm is trying to let people adjust to the new ownership.

"We've done things in moderation because we are sensitive to the legacy," he said. "That might have slowed the migration because we want to make people feel comfortable with their new firm."

Most of the people who will be transferred are under 35 years of age, and a majority don't own property here. Their typical compensation package is in the "multiple six figure" range, although some senior traders make more than $1 million while junior traders can make less than $100,000.

Last month, Deutsche Bank said that its fourth-quarter profit fell - details of which were not disclosed - but that its profit for the year more than doubled to $4.6 billion. The company also said it would cut 2,600 jobs from its 93,000-person work force. Employees in Baltimore should not be affected by those cuts, it said.

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