Bankers Trust Corp. has created a spinoff to sell and support risk management, lending, and trading room technology for commercial banks.
In its fifth such move since 1992, seeking to maximize profits from technologies it has financed or developed, Bankers Trust plans to announce today the launch of IQ Financial Systems Inc.
The $157.5 billion-asset holding company is the majority shareholder, though its exact percentage stake is not disclosed. The rest of the shares are divided among 100 employees of IQ Financial, which begins with about $25 million in annual revenue and offices in London, Tokyo, Seattle, and New York.
"We are taking people out of the technology and operations of the bank and raising their entrepreneurial spirits," said David J. Salvin, an 11- year veteran of Bankers Trust and chairman and chief executive officer of the new company.
"In an environment where everyone is consolidating and getting bigger, sometimes the best strategy and the best way to operate is to be client- focused," Mr. Salvin said.
A former president of BT Insurance Co. and BT Life Insurance Co., Mr. Salvin continues to report to Bankers Trust vice chairman George Vojta.
Though just being publicly announced, the spinoff formally occurred in March and involved 75 Bankers Trust and International Business Machines Corp. employees who supported the bank's commercial lending systems. The unit has since added 25 people.
Following this pattern before, Bankers Trust seeded start-up companies Certco LLC and GlobeSet Inc. in electronic commerce and payment security; Astratek, a New York-based builder of network administration systems; and Zoologic, which sells training software for financial professionals.
All were nurtured by BT Ventures, a venture capital subsidiary formed in 1992. BT Ventures is playing a similar capital-infusion role with IQ Financial Systems, but in contrast to the earlier examples, its businesses have been going concerns within Bankers Trust.
"This one is much larger in size and scope," said Doba T. Isaacs, chief administrative officer of IQ Financial. "The others were start-ups that had an idea and then grew."
Though BT Ventures supplies capital, "the know-how and intellectual capital comes from all around the bank's different operating areas," Mr. Salvin said. And Bankers Trust becomes an "important client" to IQ Financial Systems, with contracts signed and executed upon.
The consultant Diogo Teixeira, president of Tower Group in Newton, Mass., said the spinoff makes good sense.
At a time when many independent software vendors form, reinvent wheels, and ultimately fail, Mr. Teixeira said, Bankers Trust has "a business that is up and running.
"Why shouldn't a bank, just because it is very large and because it has a lot of talented people, also play in that game?"
"Our heritage is with products," Mr. Salvin said. "The challenge for us is to bring up a marketing and sales organization."
Bankers Trust's proprietary trading, lending, and risk management systems, some more than 10 years old, have been sold to 17 large financial institutions globally.
IQ Financial Systems' Loan IQ product is used by six undisclosed financial institutions in syndicated lending.
The seven-year-old system, which was developed with IBM, automates many of the paper-based administrative duties related to syndicated lending, whether as lead bank or as a participant.
A second system, Risk IQ, is an enterprisewide risk management system using Monte Carlo simulation techniques that has been sold to Sumitomo Bank of Japan and one other, undisclosed, institution.
The third and oldest product line is Remos, which is used by 13 banks globally for securities trading, deal captures, and other trading room tasks.
On its own, IQ will be marketing to hundreds of sizable financial institutions around the world. Company officials hope its independent status will make it more palatable to potential buyers than Bankers Trust Co. of New York, with the latter's expertise at its heart.
Said Mr. Vojta: "IQ Financial Systems as an independent company combines an entrepreneurial, innovative approach with the legacy of Bankers Trust's acknowledged expertise in risk management and global markets."