|
Chase eyes UK bank buy
|
 |
March 23, 2000: 3:27 p.m. ET
U.S. bank, looking for overseas foothold, confirms talks with Robert Fleming
|
LONDON (CNNfn) - Chase Manhattan Corp. confirmed Thursday it has entered preliminary merger discussions with prominent U.K.-based investment house Robert Fleming Holdings, a deal that would significantly expand the bank's presence overseas.
Chase, the nation's No. 2 commercial bank in terms of assets, said in a prepared statement it had "entered discussions about a possible combination of businesses" with Robert Fleming.
While the New York-based bank noted it does not typically comment on confidential negotiations or market rumors, it said it was doing so Thursday at the request of Fleming, which issued a similar statement earlier in the day. The U.K.'s Financial Times first reported the companies were in talks.
 Chase (CMB: Research, Estimates) shares soared following the confirmation, rising 7 to 98-9/16 by mid-afternoon.
Chase has been steadily adding to its small investment banking business since paying $1.46 billion last year for San Francisco-based Hambrecht & Quist, a boutique investment house focused on the technology sector.
The addition of the privately-held Fleming, which analysts have valued at between £2.5 billion and £3 billion ($4.7 billion), would give Chase access to its investment banking prowess in emerging markets such as Asia and central Europe, although it still would be small in stature compared to industry leaders Goldman Sachs (GS: Research, Estimates) and Merrill Lynch & Co. (MER: Research, Estimates).
But the U.K. firm's strength clearly lies in its wealth-management unit, which held assets under management of roughly $140 billion at the end of 1999. The business generated a pretax profit of £75.8 million for the year while Its investment banking unit reported a £5.8 million loss.
Chase itself currently holds about $226 billion in assets under management.
Overall, Robert Fleming made a pretax profit of £70 million in the 12 months to Mar. 31 last year and reported pretax earnings in the six months to Sept. 30 of £110.1 million, up from £20.8 million in the same period a year earlier.
A family operation
Fleming is one of the last remaining independent U.K. investment banking houses. A sale to Chase would mark the second U.S. purchase in the sector this year, following January's acquisition of the investment banking arm of Schroders for £1.36 billion by the Salomon Smith Barney unit of Citigroup (C: Research, Estimates).
Until now, Fleming has stoutly defended its independence. Its founding family retains a 29 percent stake in the group, with Hong Kong-based financial conglomerate Jardine Matheson owning 18 percent, while the balance is in the hands of staff and institutional investors.
Chase has flirted with moves to become a full-fledged investment bank for a number of years and reportedly has seen its advances toward Merrill Lynch (ML: Research, Estimates) rejected.
However, its expanded investment banking unit made a strong contribution to Chase's record fourth-quarter 1999 earnings. The business reported fee income of $499 million, up 31 percent from the 1998 quarter. 
|
|
|
|
|
 |
|
