Bankers Trust buys Alex Brown for $1.7bn
The deal, coming close on the heels of February's $10.2bn merger between Morgan Stanley and Dean Witter, Discover, will rekindle speculation about consolidation on Wall Street.
Bankers Trust, America's seventh-largest bank, took advantage of steps taken last year by the Federal Reserve to loosen the rules that have traditionally curbed the involvement of US banks in the securities business. The restrictions date back to the 1933 Glass-Steagall Act.
The Fed raised to 25 per cent from 10 per cent the proportion of revenue that US banks can earn through the underwriting of securities.
While there is wide anticipation of mergers between securities companies - as with the Morgan Stanley-Dean Witter marriage - Wall Street will now look for more swoops by banks on mid-size brokerages.
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