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January 1, 1998

The Good News for Stamford: Traders to Stay at SBC Complex Swiss Bank Merger Won't Rattle Sparkli

By Michael L. O'Reilly

Union Bank of Switzerland and Swiss Bank Corp., the two banking giants planning to merge later this year, have sent a reassuring message to Stamford SBC's trading operations will remain in Connecticut.

The sparking $200 million complex that houses roughly 700 traders working for its SBC Warburg Dillon Read subsidiary, was unwrapped by SBC last August.

On Dec. 8, the two Swiss banks announced their agreement to merge in a $25 billion deal that would create the world's second largest bank. The deal is expected to close in May.

"This is a merger of economics," said Dennis Gallant, a money-management consultant at Boston-based Cerulli Associates. "The two banks are positioning to keep from being acquired."

The combined banks, to be named United Bank of Switzerland, will have $592 billion in total assets and $913 billion in managed assets. According to insiders, the new bank will have four major divisions: private banking, institutional asset management, consumer and corporate banking and SBC Warburg. Bank sources calculate that half of the new company's yearly revenue will be generated by SBC Warburg.

"SBC Warburg is institutional based," Gallant said. "United Bank will probably make a strategic move to gain retail access in the U.S. after the housecleaning is completed."

SBC Warburg, the international investment-banking arm of Swiss Bank, has undergone rapid growth in the last seven years. In 1992, it completed its acquisition of O'Connor Associates, a Chicago-based derivatives partnership.

Two years later, SBC Warburg acquired Chicago's Brinson Partners, a money-management firm, in a deal worth $750 million. In 1997, SBC Warburg acquired New York-based investment bank Dillon, Read & Co. in a $600 million deal. All told, SBC's eight U.S. branch offices currently have 3,000 employees.

SBC Warburg will keep its investment banking headquarters in New York.

World's Largest Banks Ranked by 1996 Assets

Rank Bank Assets in Billions

1 Bank of Tokyo-Mitsubishi 752

2 UBS/Swiss Bank 590

3 Deutsche AG 575

4 Sumitomo Bank 513

5 Da Ichi Kangyo Bank 476

6 Fuji Bank 474

7 Sanwa Bank 470

8 ABN Amro Holdings 444

9 Industrial & Commercial Bank 436

10 HSBC Holdings 405

All figures in U.S. dollars

Source: Dow Jones

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