The investment bank itself turned in a pre-tax gain of dollars 51m ( pounds 31.6m), but all but dollars 1m of that came from the sale of its merchant-banking stake in a US supermarket chain. Salomon's other subsidiary, Phibro Energy, lost dollars 23m pre-tax after taking a charge of dollars 15m to cover expected ship-chartering losses in the next year.
The parent company's after-tax loss was equal to nine cents a share, after preferred dividend payments were subtracted from its dollars 6m operating profit. In the same period a year ago - when Salomon first revealed its role in the US Treasury auction bidding scandal - the group made dollars 85m, or 60 cents a share.
Salomon Brothers was vague about the reasons for the unexpected loss, citing additions to its reserves against losses in its derivatives operations and for future legal expenses. Securities industry analysts said Salomon appeared to have done well in the areas where its competitors also excelled - investment banking and other customer business - but that it had apparently suffered important 'paper' losses in its proprietary trading portfolio.
Despite its poor results in the third quarter, Salomon Brothers' pre-tax profits for the first nine months of the year, dollars 887m, are running only 12 per cent behind the dollars 1bn record it set up to 30 September of last year.Reuse content