Alex. Brown: opposed views

Stature: The banking firm has experienced a series of blows that some say have diminished it. Others disagree, saying the firm remains vital.

October 07, 2001|By Bill Atkinson | By Bill Atkinson,SUN STAFF

Over a gourmet lunch prepared by a chef on the 30th floor of the Alex. Brown tower, executives spoke seriously but excitedly last month about working for Deutsche Bank AG: bigger deals than ever before, unlimited opportunities, influence.

Fifteen floors down, Alex. Brown's cavernous trading floor, where once stock traders simultaneously clutched phones to their ears and barked buy and sell orders, sits deathly silent, filled with rows of empty desks, each with a white computer that hasn't been turned on in months.

After enduring two acquisitions in four years, both the near-empty trading floor and the exuberant executives symbolize Alex. Brown today.

The question has become: Is Alex. Brown better off and stronger as part of a global giant bank, or has it lost much of what made it a special and dynamic company that prospered for almost two centuries independently and more than any other firm helped shape Baltimore?

"Alex. Brown as I know it, for all intents and purposes, is gone," said Frank Bonsal, founding partner of New Enterprise Associates, a Baltimore-based venture capital company and a former Alex. Brown executive. "Most of the people are either dead, retired, and those that are left are doing a very much different business than what Alex. Brown's business was when I was there."

Critics say that in the four years since Alex. Brown was first sold, it has lost large numbers of executives, nearly its entire trading and research divisions, and its corporate culture is being swallowed by its parent company, which is based in Germany.

"They have just ticked away this unit and that unit," said Richard C. Mike Lewin, former secretary of Maryland's Business and Economic Development Department. "As far as their presence in the city, it really has dwindled."

Executives at Alex. Brown bristle at the suggestion that the firm is less than it used to be. They argue that Baltimore is an important hub for Deutsche Bank, that it is doing more business than ever, divisions are growing and a number of local executives have key jobs.

"My blood pressure goes up when I hear this is a ... shadow of itself," said Benjamin Griswold IV, senior chairman of Deutsche Banc Alex. Brown and a descendent of the founder, Alexander Brown.

While some jobs have moved to New York, divisions in Baltimore are growing, he said. The private client group, which employs 410 brokers nationwide and in London, recently opened an office in Houston and plans to add 20 brokers. The firm's data processing operation in Baltimore County has won business and has 130 people in Hunt Valley and 400 others who work in Timonium, with plans to expand.

The firm also continues to give generously to the community. Last year, it gave $5.5 million to local nonprofit organizations, more than double what it usually gives each year. And 66 members of the firm gave $10,000 or more to the Alexis de Tocqueville Society of the United Way of Central Maryland.

Griswold said a number of executives in Baltimore hold key jobs with Deutsche Bank.

David M. DiPietro heads North American Equities for Deutsche Banc Alex. Brown; Thomas Schweizer Jr. runs the company's private client group; and Margaret Preston is chief financial officer of Deutsche Banc Alex. Brown's global private banking unit.

"The businesses these [people] run are very, very big businesses," Griswold said.

Also, Deutsche Bank's size and muscle have helped it land several huge deals to raise capital for large corporations such as Kraft Foods division, which in June issued shares in a $8.7 billion offering.

"We are a major player worldwide," Griswold said. "There are pieces of business that Alex. Brown couldn't have gotten within 100 miles of" as an independent company.

That is part of the rub: Many struggle with the fact that the Baltimore institution, the oldest investment banking house in the country, was sold in the first place.

"Do I wish we never sold out? The answer is, yes I do," said Truman Semans, vice chairman of Brown Investment Advisory & Trust, who worked at Alex. Brown for about 25 years. "I am not making the judgment whether it was right or wrong. It was a sad thing to have happened."

But Alex. Brown executives have always insisted that they had little choice. The firm had to be larger to compete and survive, and the signs were clear that neither was possible as an independent company. Big deals were slipping away, and customers were demanding a wider menu of services that Alex. Brown couldn't provide.

On April 7, 1997, Alex. Brown stunned the city by announcing that it would be acquired by Bankers Trust Corp., based in New York, for $1.7 billion. To some, that was the beginning of the end.

Nine months after the deal was announced, A.B. "Buzzy" Krongard, chairman and chief executive of Alex. Brown, shocked employees by resigning to take a job with the Central Intelligence Agency.

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