City File: Kleinwort profits rise masks reverses

THE DISMAL performance of Kleinwort Benson since Big Bang will be underlined when the merchant bank announces its 1992 results on Thursday. Although there will be a 10-15 per cent improvement in the pre- tax profits to around pounds 31m, this can be more than accounted for by a lower bad debt charge. The underlying businesses seem to be in decline.

Kleinwort's attempts to become an integrated merchant bank and securities house can hardly be described as a roaring success. It has lost its way relative to S G Warburg, which also followed the integrated route, but more markedly when compared with Schroders, which never developed a significant securities business and concentrated on increasing its merger and acquisitions side.

Phillip Gibbs, merchant banking analyst at BZW, has come up with an interesting comparison. Kleinwort's share price today is nearly 30 per cent lower than it was at Big Bang in 1986. Schroders' is more than 300 per cent higher.