Alex. Brown is back in busi­ness af­ter 20-year gap, new owner

Ray­mond James brands its wealth man­age­ment unit

Baltimore Sun - - FRONT PAGE - By Sarah Gantz

Alex. Brown is back — in name, at least. The name of the le­gacy in­vest­ment bank­ing firm that es­tab­lished Bal­ti­more as an early fi­nan­cial cen­ter is re­turn­ing nearly 20 years af­ter it was stamped out in a se­ries of ac­qui­si­tions.

Ray­mond James Fi­nan­cial Inc. fi­nal­ized its ac­qui­si­tion of Deutsche Bank Wealth Man­age­ment’s U.S. Pri­vate Client Ser­vices Unit on Tues­day and an­nounced it would re­name the unit Alex. Brown.

Alex. Brown — later and bet­ter known as Alex. Brown & Sons — was founded in 1800 by an Ir­ish im­mi­grant and linen mer­chant and went on to be­come the na­tion’s first in­vest­ment bank­ing firm. The com­pany was ac­quired by Bankers Trust Corp. for $2.5 bil­lion in 1997. Two years later, Deutsche Bank ac­quired Bankers Trust and re­branded Alex. Brown un­der its own name.

Once the pride of Bal­ti­more, Alex. Brown’s ac­qui­si­tion and name change was a gut punch to the city, and news that the com­pany — or at least its name — would re­turn was met with mixed emo­tions by those who lived the com­pany’s le­gacy.

“It’s good and bad,” said A.B. “Buzzy” Kron­gard, Alex. Brown’s CEO at the time the firm was sold to Bankers Trust. “If you see your ex-wife some­where, some­times it’s good, some­times it’s bad.”

The newly minted Alex. Brown will be a di­vi­sion of St. Peters­burg, Fla.-based Ray-

mond James’ pri­vate client busi­ness group, fo­cus­ing on wealth man­age­ment for high­net-worth in­di­vid­u­als, pri­mar­ily those with as­sets of at least $3 mil­lion. The di­vi­sion has 16 of­fices with 600 em­ploy­ees, in­clud­ing100 based in Bal­ti­more. Alex. Brown man­ages about $50 bil­lion in as­sets.

“We are par­tic­u­larly proud to be tak­ing on the Alex. Brown brand, orig­i­nally founded as the na­tion’s first in­vest­ment bank more than 200 years ago,” said Haig Ariyan, the unit’s new pres­i­dent, who for­merly served as co-head of Deutsche Bank Wealth Man­age­ment Amer­i­cas. “There is deep affin­ity among our ad­vis­ers, who un­der­stand Alex. Brown’s im­por­tant role in the growth and pros­per­ity of Amer­i­can com­pa­nies and mu­nic­i­pal­i­ties, and its rep­u­ta­tion for serv­ing the needs of ul­tra-high-net-worth clients and in­sti­tu­tional in­vestors.”

Alex. Brown’s his­tory is in­ex­tri­ca­bly linked to that of Bal­ti­more and the U.S. econ­omy. In its early years, Alex. Brown fi­nanced the Bal­ti­more & Ohio Rail­road and Bal­ti­more’s first mu­nic­i­pal wa­ter sys­tem. It ar­ranged funding for the Bay Bridge in the 1950s. Later, the firm helped with the ini­tial pub­lic of­fer­ings of such mod­ern com­pa­nies as Mi­crosoft and Star­bucks.

For nearly 200 years, Bal­ti­more proudly claimed this le­gacy in­sti­tu­tion as its own, un­til the ac­qui­si­tions by Bankers Trust then Deutsche Bank, which even­tu­ally moved much of the work to New York and else­where.

The loss came as Bal­ti­more’s stature in the fi­nan­cial world went into de­cline. Smaller banks that once had head­quar­ters or large out­posts in Bal­ti­more were ac­quired as the in­dus­try con­sol­i­dated, and their op­er­a­tions folded into larger cor­po­rate of­fices. Wa­chovia Se­cu­ri­ties moved the head­quar­ters for its equity cap­i­tal mar­kets di­vi­sion from Bal­ti­more to New York in 2005. That same year, Legg Ma­son Inc., still based in Bal­ti­more, sold its cap­i­tal mar­kets busi­ness to St. Louis-based Stifel Fi­nan­cial Corp., which re­tains a pres­ence in the city.

In los­ing Alex. Brown’s head­quar­ters, Bal­ti­more also lost a cor­po­rate leader and com­mu­nity ad­vo­cate.

“Alex. Brown had mul­ti­ple part­ners on ev­ery board in town — they were ev­ery­where and they were in­volved in funding Alex. Brown was once based in this build­ing at Bal­ti­more and Calvert streets. Built for the in­vest­ment bankers in 1901, the build­ing sur­vived the Great Bal­ti­more Fire in 1904. The build­ing is now a com­mer­cial bank. phi­lan­thropy ev­ery­where,” re­called Scott A. Wieler, a for­mer Alex. Brown ex­ec­u­tive.

Phi­lan­thropy and com­mu­nity in­volve­ment were core prin­ci­ples at Alex. Brown that came from top lead­er­ship, he said.

“It’s a big im­pact when hun­dreds of peo­ple are sud­denly not here,” Wieler said.

Deutsche Bank didn’t have the same con­nec­tion to Bal­ti­more. Over time, many ex­ec­u­tives left to cre­ate new com­pa­nies that car­ried on the firm’s le­gacy.

Wieler and other Alex. Brown veter­ans in 2002 opened Sig­nal Hill Cap­i­tal Group. The firm spe­cial­izes in mergers and ac­qui­si­tions, pri­mar­ily in tech­nol­ogy and soft­ware. The com­pany was named for an area, now known as Fed­eral Hill, where Alexan­der Brown and other traders raised flags to sig­nal the ar­rival of ships.

Alex. Brown’s le­gacy re­mains in other Bal­ti­more firms as well. Brown Ad­vi­sory, an in­de­pen­dent in­vest­ment man­age­ment firm, is a 1998 spinoff; Alex. Brown Realty, es­tab­lished in 1972 to make real es­tate in­vest­ments for its clients, went in­de­pen­dent in a man­age­ment buy­out in 1991; and ABS Cap­i­tal Part­ners, was founded by Don Hebb, the for­mer Alex. Brown pres­i­dent and CEO.

The deal to ac­quire the U.S. wealth man­age­ment unit from Deutsche Bank and re­brand it un­der Alex. Brown is a smart

“The name Alex. Brown has been out of this mar­ket for 18 years now. ... What I’m look­ing to do is re­con­sti­tute that as a brand.” Marcus F. Aiello, a re­gional di­rec­tor for Alex. Brown

move by Ray­mond James, an­a­lysts said.

The fi­nan­cial in­dus­try is shift­ing away from the hands-on in­vest­ing of bro­ker­ages, to ad­vi­sory ser­vices that value ad­vice that yields re­sults for clients, said Stephen C. Winks, who pub­lishes the in­dus­try pub­li­ca­tion Se­nior Con­sul­tant. Ray­mond James has made a push into fi­nan­cial plan­ning and will strengthen its ad­vi­sory ser­vices by bring­ing on Alex. Brown, which has a strong rep­u­ta­tion in fi­nan­cial ad­vis­ing, he said.

Ray­mond James was founded in1962 and has been pub­lic since 1983. The firm has about $548 bil­lion in as­sets un­der man­age­ment from some 2.8 mil­lion clients world­wide.

With less name recog­ni­tion than its com­peti­tors, Ray­mond James could ben­e­fit from at­tach­ing it­self to a brand with Alex. Brown’s rep­u­ta­tion, said Karyl B. Leg­gio, a fi­nance pro­fes­sor at Loy­ola Univer­sity Mary­land.

“Ray­mond James is a grow­ing com­pany, but Alex. Brown is a le­gacy com­pany,” Leg­gio said.

Marcus F. Aiello, a re­gional di­rec­tor for Alex. Brown, over­see­ing the Bal­ti­moreWash­ing­ton area, said the firm will pur­sue an ag­gres­sive growth strat­egy. Aiello de­clined to talk specifics.

Aiello also wants to re­store the firm’s for­mer rep­u­ta­tion as a com­mu­nity ad­vo­cate.

“The name Alex. Brown has been out of this mar­ket for 18 years now. ... What I’m look­ing to do is re­con­sti­tute that as a brand,” Aiello said. “We’ve al­ways been in­volved, but not as Alex. Brown in the com­mu­nity.”

Like any­one re­flect­ing on the new suc­cess of an old flame, those who long ago cut ties with Alex. Brown said they wish the com­pany and Ray­mond James well.

“There will only be one Alex. Brown and it ended, tech­ni­cally, I guess, Sept. 1 of 1997,” Kron­gard said. “It’s up to them to live up to the name.”

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