Salomon shakes off scandal to top record

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The Independent Online
SALOMON Brothers, the New York investment bank, fought back from the US Treasury auction scandal to produce Wall Street's best profits in the second quarter, topping its own quarterly earnings record by almost a third.

Excluding a dollars 185m ( pounds 99m) charge to settle with US securities regulators, Salomon Brothers earned dollars 647m pre-tax in the second quarter. Its parent, Salomon Inc, reported after-tax profits of dollars 211m, or dollars 1.68 a share, compared with dollars 178m, or dollars 1.43 a share, for the same period a year ago.

In May, Salomon paid dollars 290m to settle charges that its government-bond trading desk had entered dollars 15bn worth of illegal bids at US Treasury auctions between 1989 and last August, when the scandal surfaced. Salomon was barred from bidding as a primary government-securities dealer, a ban that is to be lifted on 3 August.

Just before the disclosures last summer, Salomon Brothers declared its best half, earning dollars 451m. Despite this year's charge and the uncertainty surrounding the government investigation, it made dollars 401m in the first six months of 1992.

'Not all the indirect effects of the Treasury auction problems have been negative,' said Robert Denham, the lawyer who succeeded Warren Buffet as Salomon chairman last month, noting that important changes had boosted shareholder value.

'With these earnings it should be clear that Salomon Brothers' core businesses remain intact,' he added.