Smith to head Morgan as control stays in UK

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The Independent Online
Morgan Grenfell Asset Management appeared yesterday to have avoided the humiliation of direct control from Frankfurt.

Instead Robert Smith is expected to be appointed as an internal replacement for Keith Percy, the chief executive.

There had been speculation that Rolf Breuer, the Frankfurt-based member of Deutsche Bank's board with responsibility for asset management, would want to take a firmer hold of Morgan Grenfell after the Peter Young debacle.

This has already cost Deutsche Bank, Morgan Grenfell's parent, at least pounds 180m. But it now appears that Mr Smith, chief executive of Morgan Grenfell Development Capital in London, could take over from Mr Percy as soon as this week.

A highly respected member of the Morgan Grenfell management team in London, Mr Smith has headed the firm's internal inquiry into Mr Young's share dealings. "He has impressed a lot of people both here and in Frankfurt," said one London-based source.

Mr Smith will have to restore Morgan Grenfell's battered image and win the confidence of some institutional clients who have threatened to remove their business if Mr Percy is forced to take the blame for the embarrassing revelations of the past month.

Up to seven executives join Mr Percy in the firing line, including Glyn Owen, chief investment officer for European investment, Graham Kane, chief executive of Morgan Grenfell Unit Trusts, and Michael Wheatley, compliance director.

A spokesman for Deutsche Morgan Grenfell said yesterday that a decision on any changes had not been taken yet. However, the firm is thought to be close to announcing the results of its six-week internal investigation, aided by accountants Ernst & Young, into how Mr Young set up a maze of Luxembourg holding companies to hide his investments in high technology companies.

The Investment Management Regulatory Organisation has undertaken its own inquiries into the trading history of the funds. Imro's investigation, which could lead to hefty punishments against the firm and individuals inside the firm, will take longer to conclude.

Mr Young, sacked by Morgan Grenfell last month, is now being investigated by the Serious Fraud Office. He has had his assets frozen and his passport confiscated.