NEW YORK - Deutsche Banc Alex. Brown, which lost market share in the underwriting of junk bonds last year, has rebounded after hiring almost two dozen senior bankers and focusing on gambling companies and leveraged buyouts.
The U.S. investment banking unit of Deutsche Bank AG rose to No. 5 in the first half, from No. 12 last year. Officials attributed last year's slump to distractions caused by the $9 billion acquisition of Bankers Trust Corp. That firm's U.S. securities arm, BT Alex. Brown, ranked No. 5 in underwriting junk bonds in 1998, according to Thomson Financial Securities Data.
After the merger Deutsche had to "restore some confidence and rebuild with the existing people," said Richard Byrne, global head of high-yield capital markets. "Now we're supplementing that with talented people from elsewhere."
Mr. Byrne, along with Tom Gahan, Deutsche's global head of credit products, came to Deutsche from Merrill Lynch & Co. last year.
This year the firm added managers from Bear Stearns Cos., including David Bitterman and Erik Dybesland, both Institutional Investor-ranked high-yield research analysts, and Jason Fritz, a managing director in high-yield bond sales. They followed managing director Carl Mayer and high-yield strategist Walter McGuire, who joined Deutsche from Bear Stearns a year ago.
Tom Haag, who helps manage about $1.7 billion of high-yield debt at Lutheran Brotherhood in Minneapolis, said Deutsche Bank has "made a statement to show that they're back in a big way."
Though the firm's first-half market share has more than doubled from last year, to 6.4%, a big gap remains between Deutsche and its higher-ranked competitors. Goldman Sachs Group and Donaldson, Lufkin & Jenrette Securities were in the No. 1 and No. 2 spots in the first half, and each had more than twice Deutsche Bank's stake.
Timothy Comiskey, director of financial institutions at the ratings company Fitch, said Deutsche would "have to take a major step to enter the next echelon" of top-three underwriters.
Mr. Byrne says he enjoys an advantage in arranging credit for gaming companies, because he spent more than a decade overseeing gaming research at Merrill.
In the first half Deutsche captured 50% of the market for underwriting casino finance, or $1.5 billion of sales, the most of any investment bank in that area. Companies like MGM Grand Inc. and Park Place Entertainment Corp. have tapped Deutsche to sell securities.
The firm has also built on business arranging credit for leveraged buyouts, an area headed by Ted Virtue, who joined Bankers Trust 10 years ago.
In the first half Deutsche managed buyout-related bond sales for companies such as Jostens Inc., which makes school yearbooks and class rings; Orius Corp., which designs, installs, and maintains wiring for cable-television companies and telecommunications firms, and Dayton Superior Corp., a maker of metal forms used in concrete construction.