After operating separately for more than a century, the Lazard banks in New York, Paris, and London have decided to join forces.
Michel David-Weill, chairman and chief executive of Lazard Freres & Co. LLC in New York, said Monday that it expects to complete the merger of its operations with those of Lazard Freres & Cie. in Paris and Lazard Brothers & Co. in London in six to nine months.
The move is intended to integrate worldwide decision-making and create a "self-perpetuating and independent" global partnership, he said.
Andre Cappon, a banking analyst with CBM Group in New York, said Lazard "was the last of the specialized firms where people with force of personality, contacts, and ideas could make things happen."
However, he added, "many of the firm's high-profile names have retired."
"What's left is a small firm that is not full-service, that doesn't have critical mass, doesn't do trading and underwriting. They are very nervous about getting squeezed out or passed over in the new world."
Analysts noted that Lazard's policy of running separate fiefdoms in three cities had become increasingly untenable as big U.S. investment firms globalized.
"I would imagine they are doing it to better compete with firms that are very well integrated," said one New York-based securities firm analyst, who asked not to be identified. "To the extent to which they can leverage their expertise, it makes sense for them to do that."
Mr. David-Weill himself emphasized that the firm will be run as a single operation.
"It will not be French, American, or British, but rather a global partnership built on a common philosophy of independent advice for clients."
The firm also announced Monday that Steven Rattner has been named deputy chairman effective September, giving up the position of deputy chief executive.
William Loomis, a managing director and member of the management committee who has been with the firm 20 years, will assume Mr. Rattner's job as deputy chief executive.
"Given that the firm is about to begin the process of combining operations, which will require an enormous commitment of time and responsibility, this is the perfect time to have someone else take on the operating management of the firm," Mr. Rattner said in a statement.
Though best known for its activities in arranging mergers and acquisitions, Lazard has been steadily expanding geographically and into other areas of investment banking, such as private equity funds, venture capital funds, real estate finance, and asset management, where it currently has over $70 billion of assets under management.
Founded as a San Francisco-based dry goods firm in 1848, Lazard gradually evolved into three separate investment banking partnerships in New York, London, and Paris. The London bank was subsequently taken over by Pearson PLC, the parent company of the Financial Times and Euromoney.
In 1984, Pearson traded its stake in the London company for a 50% stake in Lazard Partners, a New York-based holding company that owns 100% of the London bank, 11.4% of the New York bank, and 12% of the Paris bank.
Without disclosing any figures, Lazard said that profits its New York office reached record levels in 1998, up 40% over 1997.
Lazard's Paris office has played a major role in some of France's largest privatizations. It snagged a major prize this year when it received the mandate to advise France's Banque Nationale de Paris on its hostile $38 billion bid for Societe Generale and Paribas Group.
Nonetheless, the group has suffered increasing difficulty retaining high-profile executives. Felix Rohatyn left two years ago. More recently, John Nelson, vice chairman of Lazard Brothers in London, left to join Credit Suisse First Boston. Gerald Rosenfeld, who headed investment banking in New York, left in March last year to join BankAmerica Corp.
In one of the most controversial departures, Edouard Stern, Mr. David- Weill's son-in-law, left in April 1997 after a feud with Mr. David-Weill.