Lazard: What lies ahead for the merchant bank?

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The Independent Online

Corporate financiers are like football players. When they join a club, the praise is fulsome. "The manager understands football and the club has ambition," they say. When things go wrong, leaks appear in the sports pages, criticising team selection and agitating for a transfer.

In this context, Bruce Wasserstein's comment that "when I began my own firm, I aspired to become like Lazard" should be seen in the light of weeks of courtship between the venerable merchant bank and the veteran Wall Street deal-maker.

It came to a head this week when "Bid 'em up Bruce" quit Dresdner Kleinwort Wasserstein and became the effective chief executive of Lazard. The deal, predicted in this paper last week, followed the departure of the last person who held the post, William Loomis Jr, and the previous incumbent, Steven Rattner. The difference, says Lazard chairman Michel David-Weill, is that he is relinquishing his executive powers when Mr Wass- erstein arrives in January and the new man is putting a large part of his considerable fortune into the Lazard partnership.

But is this a marriage made in heaven? First let us consider Bruce Wasserstein's track record. A corporate lawyer who moved into mergers and acquisitions with First Boston, he became a legendary "rainmaker" – a person who creates deals from nothing. He brokered Texaco's acquisition of Getty Oil and advised on the famous "barbarians at the gate" purchase of RJR Nabisco. At the height of his fame he quit to form his own company, Wasserstein Perella. It originally had the backing of Nomura. But the Japanese giant got cold feet and last year Bruce brokered a deal to sell the operation to Dresdner Bank for $1.6bn (£984m) – $600m of which went to Mr Wasserstein.

The plan was to merge Wasserstein Perella with Dresdner Kleinwort Benson, the London-based merchant bank, so creating a global bank. When Dresdner merged with Allianz, the German insurer, a plan was formed to float the investment bank.

However Dresdner changed its mind. "Bruce though he could pass go twice, collecting a lot more than £200, and end up running his own independent investment bank," said a rival. "When this was blocked, you could say he was pissed off."

Tensions also arose between Mr Wasserstein and senior executives within the bank – notably Allianz board director Leonhard Fischer and Kleinwort's corporate finance boss Tim Shatlock. And, as when footballer's have itchy feet, leaks started appearing in the press signalling Bruce's battles with the Germans. Michel David-Weill watched with interest. He saw Mr Wasserstein as a new Felix Rohayn, the legendary Wall Street deal-maker who retired from Lazard a few years ago.

But the Lazard of Mr Rohayn's era and the Lazard today are quite different. Then the bank was top of the tree in France, strong in the UK and thriving on Wall Street. But all three businesses were run separately. Now it has been overtaken by Goldman Sachs and Rothschild in France, is well down the ranking in the US and is just holding its own in London. More importantly it is run as one group, having merged its operations two years ago.

Mr Wasserstein is clearly a deal-maker. But is he a manager? His former colleagues at Kleinwort are not so sure. And his new colleagues at Lazard are privately saying his high- profile image may not blend with the more reserved culture of the bank he is joining.

Finally, as a man not averse to making a few dollars, is there an exit strategy in prospect for Bruce? Is he going to prepare Lazard for a flotation – or worse, a sale?