PaineWebber's Cohn, Outspoken Analyst, Is Fired

In a major Wall Street shake-up, veteran banking industry analyst Lawrence W. Cohn has been dismissed from PaineWebber Inc.

"I was fired," said Mr. Cohn, who has been one of the least bullish and most outspoken bank analysts over the past several years. Recently, he has warned that bank earnings have been subjected to increased "window dressing" to maintain momentum.

Mr. Cohn is being succeeded at PaineWebber by Ruchi Madan, who moves over from Prudential Securities Inc. She follows Michael Culp, who moved from Prudential to PaineWebber as its new director of equity research about three weeks ago.

Though abrupt departures are hardly unknown on Wall Street, these changes seem to underscore the heightened competitive atmosphere in the brokerage business despite the long bull market in stocks.

In particular, aftershocks are still being felt in the investment community in the wake of the blockbuster merger of Dean Witter, Discover & Co. and Morgan Stanley & Co., and the acquisition of Alex Brown & Sons Inc. by Bankers Trust New York Corp.

The shift also highlights a new direction in coverage of banking by PaineWebber, a brokerage industry heavyweight with an extensive retail office network.

The firm has not offered its clients extensive analyst coverage of banks during the past several years despite the fact that bank stocks have been a major factor in the record advance of the market.

The firm notably abandoned most coverage of regional banks in November 1995 after the departure of analyst Thomas D. McCandless, who is now at Natwest Securities.

Mr. Cohn tracked an array of major money-center and superregional banks for PaineWebber, but his guarded outlook on the industry led him to recommend only a handful of those stocks.

In contrast to more bullish analysts who argue that bank profits have entered a new era of stability that ought to translate into higher price- earnings multiples for their stocks, Mr. Cohn still views banking as a cyclical industry subject to the whims of the business cycle.

Last month, at the quarterly American Banker analyst roundtable discussion, Mr. Cohn questioned the wisdom of stock repurchase programs at some banks because of high share prices, and said he was concerned about higher credit card delinquencies.

"The industry keeps dodging these bullets, but I don't think you can do it forever, so we're getting much more cautious," he said. Recently, his recommendations were limited to Bankers Trust and First Union Corp.

Mr. Culp declined to comment beyond saying, "Mr. Cohn is no longer with the firm."

Ms. Madan worked for several years at Prudential as assistant to veteran analyst George M. Salem before becoming an analyst.

Mr. Culp noted that she was identified last year by Institutional Investor as the "best up-and-comer" in coverage of regional bank stocks.

"I have worked with (Ms. Madan) for almost seven years, and I have enormous respect for her analytical skills," he said. "I'm very excited that she is my first hire."

Signaling an increased commitment to bank stock coverage, Mr. Culp said that he plans to hire a second analyst to cover the smaller-capitalization regional banks.

"The bank stocks are important for our institutional clients, retail brokers, their clients, and to some extent, our investment bankers," he said.

Mr. Cohn, 50, has been a bank analyst on Wall Street for more than two decades. Reached at home on Tuesday, he said he hopes to continue in that career.

Before joining PaineWebber, his main stints as a banking analyst were at Dean Witter Reynolds Inc. in 1979-86, at Merrill Lynch & Co. in 1986-88, and at Drexel Burnham from 1988 until its demise in 1990.

After Drexel he moved to an investment banking post at Chase Manhattan Corp. but returned to sell-side bank analysis after a year and a half when he joined PaineWebber in October 1991.

He is a graduate of the University of Rochester and the business school at the University of Chicago.

Jennifer Goldblatt contributed to this report.

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