Marcel Ospel, who will become chief executive of the new combine if SBC's £800m bid for Warburg's investment banking business goes through, put the emphasis on innovation and applauded the man responsible for many of SBC's most contentious deals.
Asked whether the new corporate finance department will lean towards the SBC culture or that of Warburg, now a by-word for correctness, Mr Ospel replied: "It will be an innovative new bank, to be built on the strong client-oriented Warburg culture, properly merged with the strong risk-management and resources of SBC."
Wasrburg's Mark Nicholls will head the combined corporate finance department. However, it is significant that Mr Ospel, a Swiss national who previously worked in SBC's London office 15 years ago, stood by a senior member of SBC's corporate finance team, Brian Keelan, who has generated numerous complaints over the past 30 months.
"Sure, Mr Keelan will be staying," Mr Ospel insisted. "He is a very good operator, and I know he will work well with the Warburg people."
Yet it is only just over a year since Warburg's Sir David Scholey, who will be chairman of SBC Warburg, was complaining to Rodolfo Bogni, SBC's London head, about Mr Keelan's behaviour concerning a planned £750m rights issue by Eurotunnel, the Channel Tunnel operator. Last year, rival merchant banks complained about SBC's conduct to the Bank of England, the London Stock Exchange and the Securities and Investments Board.
In April 1994, Sir Alastair Morton, joint chairman of Eurotunnel, issued a statement accusing Mr Keelan of making statements that were "improper, incorrect and unauthorised". He went on to stress that Mr Keelan would play no part in the underwriting of the rights issue.
SBC has been involved in several other situations where it has tried to elbow established advisers out of the way with innovative or better- priced fund-raising schemes.
In November 1992, it advised on Granada Group's failed attempt to buy the Gardner Merchant catering business from Forte. Five months later, it helped Granada buy Sutcliffe Catering from P&O. Granada's usual merchant bank is Lazard Brothers. In February 1993, SBC underwrote a slice of a £204m rights issue by Trafalgar House, cutting out the company's traditional advisers, UBS, and the powerful stockbroking firm of Cazenove.
On several occasions later that year, SBC then undercut the Barclays Bank securities offshoot, Barclays de Zoete Wedd, in a plan to buy shares issued to investors instead of cash dividends.
In October 1993, SBC helped Hongkong Land increase its stake in Trafalgar House from 15 per cent to 25 per cent. Four months on, SBC and the merchant bank Robert Fleming defied convention when they staged an auction to place unclaimed shares from Trafalgar's latest £425m rights issue. UBS and Cazenove were again left on the sidelines.
SBC and Mr Keelan have delighted in attacking the City establishment. "The old school tie still runs the City," Mr Keelan claimed last year.
"They take rumps of rights issues and share out the proceeds through underwriting and sub-underwriting. It's a scandal . . . it's outright theft."
Mr Ospel, an urbane SBC careerist, is embarking on a "hearts and minds" campaign to hold on to key Warburg staff. His press adviser Kerry Underhill reported that Mr Ospel received a standing ovation when he addressed Warburg staff on Thursday. But Warburg bonuses for the year to March - in themselves a handsome gesture after a year in which the group lost £16.9m pre-tax - are being delayed for several weeks.
Mr Ospel is expected to use that time to persuade Warburg executives of the rosy prospects at the merged SBC Warburg. He will also outline a new incentive scheme made up of cash, SBC group shares and "phantom shares" in SBC Warburg. That will be a subsidiary of SBC, but will have its own profit-and-loss account from which an equity value can be calculated.Reuse content