Salomon topples BZW in gilts

Salomon Brothers, the US investment bank, has deprived BZW of its traditional position as the most profitable gilt-edged market-maker.

It made pounds 28.9m in profits in 1995 compared with BZW's pounds 21.9m, a five- fold improvement on 1994, when Salomon turned in a profit of just pounds 5.6m.

Although BZW Gilts suffered a pounds 19.2m loss in 1994 after a surprise interest rate rise in the US hammered the bond market, it is generally regarded as the most profitable gilt-edged market-maker.

Last year also turned out to be another tough one for SBC Warburg. The investment bank suffered pounds 9.9m of losses, even worse than 1994, when it lost pounds 6.4m. It attributed the losses to the one-off costs of implementing risk management technology after the merger between SBC and SG Warburg last year.

"As in all of our businesses, we continue to monitor progress and make the necessary adjustments, to ensure that this business becomes a solid contributor to the SBC Warburg portfolio of businesses," an SBC Warburg spokesman said.

One of the most dramatic improvements was staged by Goldman Sachs, the investment bank, which suffered pounds 34.6m of losses in 1994. While it still failed to make a profit in 1995, its loss was a more manageable pounds 1.6m.

NatWest and CS First Boston managed to reverse their 1994 losses, making small profits in 1995 of pounds 0.6m and pounds 0.07m respectively.

HSBC Greenwell turned in a pounds 5.9m profit, compared with a pounds 0.7m loss in 1994.

Other well-known gilt-edged market-makers, also known as Gemms, such as Kleinwort Benson, JP Morgan, UBS and Deutsche, appear to have failed to make profits in 1995.