NatWest buy is 'all gain, no pain' for Bankers

Bankers Trust executives involved in last week's pounds 129m purchase of NatWest Markets' European equities business believe they have pulled off that rarest of coups - an all-gain, no-pain deal.

What Bankers Trust wanted was a stockbroking business built on solid management and a cohesive culture that could immediately slot into the bank's operations. "We benefited from the dress rehearsal of our review of BZW," said Donald Johnston, head of European mergers and acquisitions for Bankers Trust.

Bankers Trust will now concentrate on integrating NatWest's 900-strong team in eight offices in Europe and a US sales team in New York into its own US stockbroking and European bond and mergers and acquisitions operations. If all goes well the business - expected to generate sales of pounds 170m in 1997 - should pay for itself in a maximum of five years.

The only problem that arose in negotiations was the state of NatWest's back office computers, says an informed source. The problem was the high level of "fails" in executing stockbroking transactions. "If you have 11,000 fails," said the source, "each one costs money in terms of penalties paid and interest lost."

NatWest has agreed to take steps to remedy the back office. With that commitment, Bankers Trust says it is satisfied with the cost structure of its acquisition and will focus almost exclusively on increasing sales.

The bank plans to maximise the synergies between Wood Mackenzie (NatWest Markets' Edinburgh-based broker) and Alex. Brown (Bankers Trust's Baltimore, Maryland-based broker). Bankers Trust hopes to use the distribution capability of Alex. Brown to win the business of European companies floating new stock. "That's where the juice is," Mr Johnson said.

The US bank also wants to use its European equities business to gain better access to European corporate executives to discuss the ancillary businesses of complex debt offerings and corporate finance deals.

"Wood Mackenzie Consultants gets two-thirds of its revenue from selling research on the oil and gas industry," Mr Johnson said. "It knows about the energy situation in complex places like Central Asia. We know the risk of oil and gas transactions. We think we can put the two together and make money."

Bankers Trust's latest purchase is a further step in the New York institution's recovery programme. In 1995 it suffered a welter of bad publicity and customer defections after Business Week published transcripts of tape recordings showing that Bankers Trust derivative traders and salesmen were putting the bank before its customers.

In May 1996 Bankers Trust and Procter & Gamble settled a legal dispute over derivative transactions. Last December the Federal Reserve lifted its regulatory agreement with Bankers Trust concerning its leveraged derivatives business. In April Bankers Trust, which reported after-tax net income of $612m in 1996, merged with Alex. Brown.

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

The saffron censorship that governs India

Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
Prince Charles' 'black spider' letters to be published 'within weeks'

Prince Charles' 'black spider' letters to be published 'within weeks'

Supreme Court rules Dominic Grieve's ministerial veto was invalid
Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

How did fandom get so dark?

Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
The galaxy collisions that shed light on unseen parallel Universe

The cosmic collisions that have shed light on unseen parallel Universe

Dark matter study gives scientists insight into mystery of space
The Swedes are adding a gender-neutral pronoun to their dictionary

Swedes introduce gender-neutral pronoun

Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

Disney's mega money-making formula

'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

Lobster has gone mainstream

Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
Easter 2015: 14 best decorations

14 best Easter decorations

Get into the Easter spirit with our pick of accessories, ornaments and tableware
Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

Paul Scholes column

Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

The future of GM

The greenhouses where Monsanto 'plays God' with the future of the planet
Britain's mild winters could be numbered: why global warming is leaving UK chillier

Britain's mild winters could be numbered

Gulf Stream is slowing down faster than ever, scientists say
Government gives £250,000 to Independent appeal

Government gives £250,000 to Independent appeal

Donation brings total raised by Homeless Veterans campaign to at least £1.25m
Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

The most borrowed book at Bank of England library? Oh dear

The book's fifth edition is used for Edexcel exams
Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

Cowslips vs honeysuckle

It's the hunt for UK’s favourite wildflower
Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

Did a botched blackmail attempt help Cyril Smith escape justice?

A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss