One of last year's priciest brokerage acquisitions by a bank is showing signs of paying off.

BT Alex. Brown Inc., Bankers Trust New York Corp.'s emboldened securities unit, said one-third of the 93 deals it did in the fourth quarter involved "cross-sales" to clients that had previously dealt only with the bank or with Alex. Brown.

Bankers Trust's debt clients used the new firm to issue stock, and Alex. Brown's equity clients turned to BT Alex. Brown for debt.

"We really do believe the merger equation looks like one plus one equals three," said Alexander T. Mason, managing director and co-head of corporate finance at BT Alex. Brown. "That's a different model than other mergers on the Street, where there's a lot more redundancy."

Bankers Trust announced plans in April to buy Alex. Brown & Sons, a Baltimore investment bank known for its prowess in initial public offerings. The acquisition set off a rash of bank-broker deals. The $1.7 billion Alex. Brown purchase closed Sept. 1.

The transaction is now seen as a particularly apt match between two firms that emphasize serving non-investment-grade companies. Analysts say BT Alex. Brown's performance in the fourth quarter-for which it posted record corporate finance fees of $324 million-demonstrates that.

"The synergies achieved this early on reflect on the successful integration of Alex. Brown into BT," said Brad Ball, a bank equity analyst at Credit Suisse First Boston. "I'm sure the similar client focus and product culture at the two firms also helped ease that integration."

Both Bankers Trust and Alex. Brown, as independent entities, had tried to expand into the other's businesses. Bankers Trust, a powerhouse in high- yield underwriting, started pursuing equities business in 1993. Alex. Brown, which specializes in high-tech and health-care stock deals, stepped into junk bonds in 1994.

Neither, however, was particularly successful at breaking into uncharted territory.

Indeed, one Bankers Trust client said his company would not have done its recent $137 million secondary stock offering with the banking company if it had not bought Alex. Brown.

"Alex. Brown had the distribution system that BT lacked," said Richard Bergmark, chief financial officer at Core Laboratories, a Dutch oil services company with U.S. headquarters in Houston.

Mr. Bergmark said that, likewise, Alex. Brown's bankers did not have Bankers Trust's experience in the oil services industry. "BT had the knowledge of the industry and our company from the prior deal," Mr. Bergmark said.

Last May, Bankers Trust led a $125 million loan for Core. The complicated debt package gave the company financing denominated in Dutch guilders, British sterling, and U.S. dollars.

In the fall, BT Alex. Brown found two buyers for San Antonio-based Kinetic Concepts, which Alex. Brown had taken public in 1988. The buyers, Fremont Partners and Richard Blum & Associates, two leveraged buyout firms, were longtime clients of Bankers Trust.

As part of the buyout, BT Alex. Brown in October led a $200 million high-yield issue for Kinetic Concepts, with BankAmerica Robertson Stephens. Bankers Trust also syndicated a $400 million credit facility for Kinetic.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.