Executives at Deutsche Bank, seeking to regain market share in the high-yield business that veered off track when the bank acquired Bankers Trust Corp., have embarked on an ambitious rebuilding of its junk bond group.

Like many firms, Deutsche is hiring. Plans include adding staff to the high-yield and mezzanine finance team, both to expand offerings and offset some departures. As Deutsche combined its existing fixed income business with Bankers Trust's, it lost some senior people. Matthew Collins, a managing director at Bankers Trust in London, joined Merrill Lynch's leveraged finance team last March, bringing six executives with him, and Timothy Collins in July left to join J.P. Morgan's high-yield syndicate desk.

Alexander Mason, co-head of global industry groups for Deutsche Banc Alex. Brown, says he will be placing new investment bankers to cover industries that are traditionally heavy users of the high-yield bond market. In telecommunications, for instance, he plans to hire three to five professionals this year.

Richard Byrne, 38, the global head of high-yield debt capital markets who joined the bank just before Deutsche's $9 billion acquisition of Bankers Trust closed last June, wants to reverse market share losses - the firm dropped out of the top 10 in 1999 - within the year.

"We want to be in the top five this year, and we have every intention of being No. 1 over time," said Mr. Byrne.

Mr. Byrne, formerly co-head of global leveraged finance at Merrill Lynch & Co., joined another former Merrill executive, Tom Gahan, who was hired to lead leveraged finance at the combined bank. "I came in at the ninth inning" of the merger process, he said. Mr. Byrne said central to the turnaround plan are select hirings for the 25 or so people in the high-yield and mezzanine finance team who will focus on originating issues.

Strengthening relationship banking, both in Mr. Mason's group and in high-yield capital markets, is one way Deutsche hopes to reinvigorate the high-yield business. After Deutsche, which uses the Alex. Brown name when referring to its North American securities and investment banking activities, announced the acquisition in November 1998, uncertainty related to the merger virtually stalled Bankers Trust's junk bond activities.

This disruption caused a drop in its ranking among the biggest high-yield underwriters, by seven notches, to No. 12 from No. 5 in 1998. Deutsche lost 64% of its market share in 1999 from the combined volume of business Deutsche and Bankers Trust did in 1998.

Though junk bond origination was sidetracked by the merger, Deutsche gained some key strengths with the Bankers Trust purchase.

Thanks in large part to Alex. Brown, the Baltimore brokerage acquired by Bankers Trust in 1997, Bankers Trust came with leveraged finance capabilities and ties to emerging growth companies - many of which use the bond market for financing. Bankers Trust also had been one of the leaders in doing business with financial sponsors, a group of institutions that often tap the bank and capital markets when they take over a company.

To those strengths, Deutsche added a large balance sheet and its global markets products.

"Now that we have the platform, there is every reason to staff up," said Mr. Mason.

Deutsche will now maintain and build its position financing financial sponsors. It will also seek growth in the overall high-yield business by making "aggressive but prudent use of our balance sheet," Mr. Byrne said.

As a research analyst before his last post, Mr. Byrne has made some of his first initiatives in his old area of expertise. For the last three to four months he's been working on reorganizing the 30-person research side of the business, introducing a bound weekly publication and established a multicity road show for analysts.

He's also hired a few senior Wall Street bankers, including Carl Mayer, a managing director from Bear Stearns, and former Merrill Lynch colleague David Waill, a managing director who came from the origination side of the business.

Those hirings are not enough, and both Mr. Mason and Mr. Byrne emphasized that senior management is committed to building up the business.

The group is nearing an announcement of a director of high-yield research, a hat Mr. Byrne has been wearing for the last several months. Banker Trust's former head of high-yield research, Brett Levy, left for Credit Suisse First Boston at the beginning of 1999.

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