Shearson sells Boston Company

AMERICAN EXPRESS took another step yesterday towards unravelling the financial services empire it assembled during the Eighties by announcing that its Shearson Lehman division had sold its Boston Company subsidiary for dollars 1.453bn ( pounds 765m).

The buyer of the money-management unit is Mellon Bank, a large regional bank based in Pittsburgh.

The sale, which will increase Shearson's equity by dollars 250m, was not unexpected, as American Express has made clear its aim to improve its capital base and re- focus on its core traveller-related businesses.

Analysts said AmEx received a better-than-expected price for the Boston Company, but warned that the sale of the fee-generating trust and fund management businesses was likely to hurt Shearson's profitability in the long run.

While the Boston Company does not publish separate operating results, its assets are put at dollars 9.2bn. Its estimated 1993 profits are about dollars 100m, and it is expected to show good growth.

With the sale, Shearson becomes more of a pure broker and its persistent cost inefficiencies will become more apparent as Wall Street goes into a cyclical decline - the prediction of many industry analysts.

Shearson and its Lehman Brothers investment banking arm have themselves been the object of sale rumours. Wall Street, which once regarded AmEx's expansion as the most successful financial- services diversification of the Eighties, generally welcomed the sale, with American Express's share price rising. 'This is probably just the first step in an eventual spinning-off of both Shearson and Lehman Brothers,' Perrin Long, analyst with First of Michigan in Detroit, said.