BT Buying Natwest's European Equity Units

Bankers Trust New York Corp. said Tuesday it had agreed to buy the European equity research, underwriting, and trading operations of Natwest Group in London for about $217 million.

The deal adds an international flavor to Bankers Trust's push into equity underwriting, which accelerated earlier this year with the acquisition of Alex. Brown & Sons, Baltimore. The two deals help to fulfill the company's goal of building a complete corporate product line-debt and equity underwriting, lending, and advisory services.

"It expands the concept of one-stop shopping that we've been developing here in the U.S.," Richard H. Daniel, vice chairman and chief financial officer, said in an interview.

Meanwhile, Natwest said it would shutter its U.S. equity operations, affecting nearly 500 jobs. The company also agreed to sell its U.S. and Asian derivatives businesses for about $82 million.

Frank Newman, Bankers Trust's chairman, has taken a different route than some other U.S. banks that are building equity expertise, said analysts. Chase Manhattan Corp. and Morgan & Co., for example, have chosen to build such businesses internally.

In contrast, Mr. Newman has looked outside his bank for growth.

"Their focus with this acquisition was to fill a hole," said Bradley Ball, an analyst at Credit Suisse First Boston. "This acquisition rounds out their capabilities."

The acquisition also includes Wood Mackenzie Consultants, an oil, energy and gas research and consulting firm in Edinburgh, Scotland.

From Natwest's perspective, the sale is part of a restructuring undertaken earlier this year. Also Tuesday, Deutsche Morgan Grenfell agreed to buy Natwest's U.S. and Asian equity derivatives businesses for about $82 million. The business units being sold are part of Natwest Markets.

At the same time, Natwest said it would shut down its U.S. equity research, trading and underwriting businesses. The bank said it also wants to sell its similar operations in Asia and its Australian investment banking operations.

"We have been unsuccessful in developing this business and have therefore taken the very tough decision to effect an orderly exit," said Derek Wanless, chief executive officer of Natwest Group.

The closing of Natwest's U.S. equity operations will affect 480 of the unit's 1,500 employees. A Natwest spokeswoman said many of those employees have secured new positions or are interviewing for jobs at Bankers Trust or Deutsche Morgan Grenfell in New York.

Bankers Trust already has 3,000 employees in 25 offices in Europe. They focus on debt underwriting, leveraged lending, corporate advisory services, and trading.

The Natwest deal would bring Bankers Trust 900 additional employees and eight new offices in western Europe. Mr. Daniels, the CFO, said layoffs and cost savings are expected to be minimal because the two banks' businesses do not overlap substantially.

"We see this as a merger that will add revenues by allowing us to cross sell products to Natwest customers," said Mr. Daniel, who estimated that revenues this year for the Natwest business would range from $269 million to $286 million.

Analysts said the two banks' share overlap that make the deal attractive. Natwest's researchers already cover 40% of Bankers Trust's clients in the United Kingdom and 30% of its clients on the continent of Europe.

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