Germans plan new London push

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The Independent Online
WestLB, Germany's third-largest bank, is poised to announce plans for a build-up of its global investment banking operations in London.

Following hard on the heels of Dresdner Bank's approach to Kleinwort Benson and Deutsche Bank's accelerated expansion at Morgan Grenfell, WestLB plans a big push at subsidiary West Merchant Bank, turning it into the hub of its international amb itions, including a substantial equity capability. The plans are being finalised in Dusseldorf, the home of Westdeutsche Landesbank, and are expected to be unveiled in August. West Merchant Bank expects nearly to double its strength of 300 people in London over the next two to three years as it grows organically. "We are not looking to buy, unless a perfect deal suddenly crops up. But most of what is buyable has already been purchased," said Patrick Macdougall, chairman of West Merchant Bank.

Formerly owned by Standard Chartered, West Merchant was taken over by the Germans in two stages, with full ownership completed in 1993. A 25 per cent stake, largely passive, is held by Sudwestdeutsche Landesbank. Last year, Friedel Neuber, head of WestLB, a public sector bank owned by savings banks and the government of North Rhine-Westphalia, with total assets of pounds 276bn, made clear London would be the centre of its international ambitions.

West Merchant has a strong reputation in Third World debt and in cross- border deals involving Germany. It recently advised the Swedish firm SCA in the DM1.5bn forestry products purchase of PWA in Germany. At present it has a negligible securities operation in London, which will become a key focus of the expansion. "The drive will be research, sales and distribution- led, with market-making only a secondary consideration," Mr Macdougall said. "We are talking about quite a lot more people."

West Merchant expects to start making markets in German and emerging- market shares in London, and selected European stocks. It will not be a UK market-maker. The bank will be reinforcing its bond coverage, notably adding mainstream European bonds to its emerging-market strengths. It will also begin dealing in US treasuries, but will not be a gilt market- maker.