Fleming's £300m profits strengthen hand in takeover talks

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The Independent Online

Robert Fleming, the investment bank in takeover talks with Chase Manhattan, is poised to reveal that it made profits of £300m in the year to the end of March.

The sharp turnaround is believed by Fleming's management to have strengthened their negotiating hand. The figure reflects a buoyant second half in the course of which Fleming's profits came in at more than double the £110m reported in the first six months.

As revealed in The Independent last week, the Fleming family are pushing for around £30 a share, valuing the bank at £4.5bn. That is £1bn more than the £3.5bn that Germany's Commerzbank was believed to have offered last year.

The higher valuation would mean a windfall in excess of £700m for directors and staff if the sale goes ahead. As well as family members, the bank's staff and former staff, who are widely dispersed around the City, stand to make substantial windfalls. Employees own nearly 15 per cent of the shares.

Fleming shares, which are not quoted but are dealt in according to a formula adjusted monthly, were last quoted at around £12 a share.

Bill Garrett, chief executive, held 260,902 shares, according to the latest accounts, while John Manser, who is due to step down as chairman, had 239,698 shares. Fleming's highest paid staffer, Ian Hannam, head of the Capital Markets Division has 400,000 shares, which could be worth nearly £12m.

The improvement in the banks profits is thanks to the recovery in Asian markets, and the benefits of the integration of Jardine Fleming, the bank's Asian joint venture with Jardine Matheson, which has been integrated fully within Fleming's Asian business.

Flemings will argue that this is just the start of the turnaround and that profits for the year to come are likely to be heading for £500m or more.

A spokesman for Fleming said talks with Chase Manhattan were at an early stage, although those close to the deal say it is likely to be agreed within two weeks. No rival bidder is thought to have made a firm approach, and Commerzbank, which showed an interest in buying Fleming in the past, is unlikely to try again. Analysts believe Chase will discourage any opposition if it does make an offer close to £5bn.