Powerhouse; 200 years old: Almost from its birth in 1800, Alex. Brown Inc. has been instrumental in the life of the city. It has prospered, despite some trying moments.


Mayo A. Shattuck III was tired and fighting jet lag from the flight across the Atlantic when he ducked into the eight-story, honey-colored building at 1 Great Winchester St. in The City, London's financial district.

His mood on Tuesday, May 11, 1999, mirrored the weather: gray and a chilly 51 degrees.

Shattuck, the former president and chief operating officer of Alex. Brown Inc., and a top executive of the firm's parent, Bankers Trust Corp., had made the all-night flight for one purpose: to preserve the Alex. Brown name that was on the brink of extinction.

Six months earlier, Deutsche Bank had announced plans to acquire Bankers Trust for $10.2 billion, the largest takeover ever of an American financial institution by a foreign company. Although the deal still had not cleared regulatory scrutiny, the meeting in London had been called to settle nagging details.

Twenty executives met in the secured management boardroom on the seventh floor. Unlike the rest of Winchester House, which was furnished with extravagant sculptures and paintings, the boardroom seemed stark with its V-shaped conference table and a television camera ready to broadcast the 9:30 meeting to Deutsche Bank AG's worldwide offices.

First to speak was a representative of McKinsey & Co., the world's premier consulting firm, which had been retained to study the market value of the Alex. Brown name. He was neutral, advising neither retention nor elimination of the name.

Alexander Labak, Deutsche Bank's top man for marketing, spoke next, adamantly recommending that the Alex. Brown name be dropped once the acquisition of Bankers Trust was completed.

Then it was Shattuck's turn. Deutsche Bank, he said, had to show "respect to the American legacy" of Alex. Brown.

The legacy, he pointed out, far transcended being the oldest investment house in the United States. The firm was perhaps the single most instrumental factor in Baltimore's progression into a vibrant, modern and sophisticated city.

It had brought running water to Baltimore, created the city's first unified transportation system, helped launch the B&O; Railroad Co. and expanded power to homes and businesses by reorganizing the fragmented and warring electric companies.

Alex. Brown also was an advocate for the needy, forming a city-wide organization to help the poor, and it helped establish a private board to preserve the extensive Walters art collection. Once, it bailed out struggling firms in the city with its own money; and it launched Maryland's massive bridge-building program.

Shattuck warned that venture capitalists and clients were already telling him that if the name was lost, it would signal that the firm was no longer taking emerging growth companies public and handling their mergers and acquisitions."I had to win the argument," he recalled.

"I had thousands of employees waiting for the answer."

Labak listened, but remained skeptical. Frustrated, Shattuck finally told the group: "If you want to take the responsibility for the defections of hundreds of employees and clients off my hands, I yield to you."

At 5:30 p.m. -- eight hours after the discussion began -- Labak and the others were won over. "It was a draining exercise," Shattuck recalled. "I was relieved and elated."

Mayo Shattuck hadn't felt such excitement in months, not since Alex. Brown had given up nearly 200 years of independence by selling to Bankers Trust in April 1997.

Today, as Alex. Brown stands at the threshold of its third century, its future is more promising than anyone imagined just two years ago.

Alexander Brown's journey

If Alexander Brown hadn't had a short fuse, there would have been no name for Mayo Shattuck to fight for.

Brown was in his mid-30s, with a wife and four sons, and running a thriving linen-auction business in the booming port city of Belfast, Ireland, in the late 1790s. But underneath he was smoldering. There were clashes between Catholics and Protestants, and a plot by the "United Irishmen" to overthrow the Irish government tore at the country. The final straw for Brown came when the British government abolished Ireland's Parliament and dictated how politics and business would be conducted.

Fed up with what he considered unnecessary meddling by England, Brown boarded a ship bound for America with his wife and their eldest son, leaving the three younger boys at school in England.

There was a fall chill in the air when they arrived in Baltimore harbor in 1800, joining Brown's younger brother, Stewart, who had fled Ireland in 1796 and settled in the city a year later as a general merchant.

Baltimore was bustling. It was one of the largest and richest cities in the country, and the port teemed with ships carrying flour, wheat and tobacco to Philadelphia, Alexandria, Norfolk and Richmond.

Linen was in high demand. By winter, Alexander Brown had set up his own business at No. 12 N. Gay St. It was an instant success. His knowledge of the linen business was unmatched, and few had better connections abroad. He bought linen cheap from a cousin in Ireland, undersold competitors, and soon dominated the trade in the city.

As the business prospered, Brown's other sons finally sailed to Baltimore. They docked on a stifling July day in 1802, winning bemused looks from people as the boys ambled through town in their thick woolen English pants and socks.

The four sons -- William, George, John and James -- joined the company. After George was named partner in 1808, the firm's name changed from Alexander Brown to Alexander Brown & Sons.

The father realized that for the business to prosper, Baltimore had to. It didn't take long before the firm and the city were tightly bonded.

Alexander Brown & Sons became a leader in many of the major projects that improved the quality of life for the city's inhabitants and helped transform Baltimore into one of the most competitive and modern cities along the East Coast.

Like residents of many cities, Baltimore's citizens retrieved water from crude public wells. After raising $250,000, Alexander Brown and a group of citizens formed the Baltimore Water Co. in 1808. Soon, water flowed through city pipes.

Other projects propelled Baltimore to the forefront of change. In the 1820s, merchants were being strangled by Philadelphia and New York merchants, who used canals to ship their goods quicker and cheaper. The Erie Canal opened in 1825, and New York businessmen could sell products to people in Indiana and Illinois.

Fearing that their businesses would die, prominent businessmen in Baltimore met at George Brown's house on Feb. 12, 1827, to draw up plans for a great experiment -- a railroad. It would make Baltimore "second to no city in the union," Alexander Brown said in a letter to his son William, who by then had been dispatched to open an office in Liverpool.

Two-and-a-half months later, the B&O; Railroad Co. was formed, and it would speed cargo to Wheeling, W. Va.; Chicago; and St. Louis faster than competitors could by water.

Alexander Brown and his sons also moved quickly to save local merchants. Businessmen flew into a panic in 1834 when the Bank of the United States demanded immediate payment on loans. That would have left merchants without cash to pay their bills or buy supplies.

Alexander Brown called a meeting of bankers and merchants on March 28, 1834, vowing that no merchant in Baltimore who could show that he was solvent would be allowed to fail.

Brown guaranteed money to the local firms, saving them. But at the meeting Alexander Brown caught a cold. Six days later -- April 3 -- he died of pneumonia at age 70. The city mourned as if it had lost a war hero: flags at the Observatory and on ships in the harbor flew at half-mast.

At the time of his death, Alexander Brown was one of the wealthiest men in America with a fortune estimated at $2 million. He left his sons rich and with a thriving business.

George Brown took over. Changes came swiftly. The shipping business was risky, and, fearing that it would reverse their fortune, he and his brothers abandoned that enterprise. They began selling securities and financing ships that delivered cargo to Norfolk, Savannah and New Orleans. The firm prospered under George Brown, and, by 1836, its capital had swollen to $6 million.

He had learned the value of civic responsibility from his father. George Brown was an original trustee of the Peabody Institute, and was the first president of a city organization devoted to helping the poor.

After turning over the daily functions of the business to his son, George S. Brown, George Brown died in 1859.

Difficult times lay ahead. A political group called the "Know-Nothings" terrorized the city. They murdered rival political members, intimidated others with clubs and guns and frightened voters from the polls -- threatening to stab them with a pointed shoemakers' tool called an awl.

A reform party founded by George S. Brown and other citizens defeated the Know-Nothings in 1860 by electing as mayor his cousin, George William Brown.

There was little respite from the turmoil, however. On April 12, 1861, the country plunged into war. Many merchants, including George S. Brown, sided with the South, with which they had done business for years. But Maryland, a state where slavery was permitted, remained in the Union.

Fighting raged in Baltimore's streets. On April 19, 1861, a mob attacked a Massachusetts regiment passing through the city. Four soldiers and 12 citizens were killed. A month later, Union troops marched into Baltimore, took control of Federal Hill, aiming its canons at the city.

The war split the Brown family. Some backed the South while others sided with the North.

As the war escalated, business dried up. George S. Brown fled the country in 1862 with his wife and young son, Alexander, for Europe. There, he hunted foxes, and waited until the fighting ended.

In his absence, the firm withered, but clung to life.

After the Civil War

President Abraham Lincoln had been assassinated around the time George S. Brown returned to Baltimore in 1865. More than 620,000 Union and Confederate troops were dead and the South lay shattered --farmland, livestock and railroads destroyed, and cities such as Atlanta and Richmond decimated by fire and cannon shot.

Brown's company was hardly better off. But there was a shattered South needing to be rebuilt.

Almost immediately after the war, trade began flowing again. The city's harbor came back to life, and Alexander Brown & Sons, desperate for business but rich with connections in the South, helped rebuild the Southern states.

The company issued letters of credit to Southern businesses desperate for money to finance imports of raw sugar and coffee. It bought cotton from Southern farmers, stored it and shipped it overseas. George S. Brown organized refineries and backed a company that mined phosphate rock from rivers in South Carolina for fertilizer.

He revived the company and its good name by doing charitable work and sitting on the boards of directors of several businesses in Baltimore.

He wanted his son, Alexander, to join the company, but was met with strong resistance.

Alexander Brown was quiet and of slight build, athletic and intelligent. Like his father, he enjoyed fox hunting, and, while at Princeton University, he ran the high hurdles and excelled in gymnastics. He had little stomach for the family business.

His father prevailed, however, and persuaded his son to join Alexander Brown & Sons shortly after he graduated from college in 1878. It was a critical decision.

"I thought very seriously of retiring from active business as I had no sons or near relatives here to succeed me, and I was not especially interested in banking anyway," Alexander Brown wrote later. "It came to my knowledge, however, that many people thought I had neither the inclination nor the ability to carry on the business, so I determined to demonstrate my ability not only to carry on but to do bigger things than the old firm had ever done."

He did.

After being forced to assume control of the business after his father's death on May 19, 1890, Alexander Brown quickly made his mark.

He helped revive the ailing B&O; Railroad, which had been pushed into receivership, by selling B&O; securities. Then he reorganized Baltimore's poorly managed trolley system -- a patchwork of tracks run by competing companies -- into the city's first integrated transportation system. For the first time, people could ride for a single fare all over the city, instead of being forced to pay each time they transferred.

Alexander Brown also reorganized Baltimore's fragmented electric light companies, and the trolley and electric companies in Pittsburgh; Newport News, Va.; St. Louis; and San Francisco.

He wasn't the firm's only star. A young attorney, Benjamin Howell Griswold Jr., was impressing people, too. A graduate of Johns Hopkins University, Griswold played football and baseball. He agreed to join the firm in 1904, a month before marrying Alexander Brown's youngest daughter, Bessie.

Tall and robust, Griswold was popular. He was backed by the Democrats to run for mayor in 1910, but declined.

Like his father-in-law, Griswold believed that the firm's prosperity was tied to the city's. He spearheaded change. He argued that Baltimore's banks were too small and needed to merge to become more competitive. In 1912, he was behind the merger of the National Mechanics' Bank and the Merchants' National Bank, creating the biggest bank in the city, and the "strongest bank in the South."

Griswold was known outside Baltimore as well. As World War I raged, bureaucrats worried how farmers would feed Americans and Europeans, especially after the country entered the conflict. Members of the Farm Loan Board in Washington asked Griswold in 1916 to raise money through bond issues for 12 Federal Land Banks so farmers could meet the growing food demands.

The idea was controversial, but Griswold convinced other firms to join the syndicate led by Alexander Brown & Sons. In May, 1918, the first offering began. Others followed, including one in 1922 to raise $75 million in Federal Land Bank bonds.

During the war, President Wilson frequently consulted with Griswold on financial matters.

The company was on sound footing, and Alexander Brown announced his retirement Jan. 1, 1924, naming Griswold to head the company.

Before stepping down, Alexander Brown promised Griswold that if the firm ever stumbled, he would tap his personal fortune to help.

It took only five years for that pledge to be tested.

On Monday, Oct. 28, 1929, the stock market collapsed. The Dow Jones industrial average plunged 12.82 percent in an avalanche of selling. The next day, huge blocks of stocks were dumped and the Dow fell another 12 percent. In three days of panic selling, nearly $25 billion was lost.

Depression quickly followed. By January 1931, 42,000 workers in Baltimore, one in eight, were without jobs. Banks and businesses in the city as well as the country failed, and soup lines snaked along Fayette Street and the Fallsway.

Alexander Brown & Sons' investment banking business dried up and its revenue dwindled. But Alexander Brown kept his promise. He dipped into his bank account, and bailed out the firm.

Toward prosperity again

Alexander Brown & Sons limped out of the Depression. To help people repair their lives, Griswold pushed for a state bond issue to stem unemployment. He argued that Maryland must move ahead, and the secret to prosperity was transportation. The state, he said, needed bridges to connect itself to its Eastern Shore, Virginia, Pennsylvania and Delaware. Those bridges would enable corporations to ship goods by truck faster, and allow people to travel without wasting hours waiting for ferries.

In 1938, Griswold became fiscal adviser to the State Roads Commission, and the great bridge program began. That year, the firm and a team of investment bankers sold $6 million in bonds to finance bridges over the Susquehanna and Potomac rivers. By 1948, the firm headed another syndicate that sold $37 million in bridge bonds. Construction of the Chesapeake Bay Bridge began the same year.

But Griswold never saw the giant, silver expanse. He died on July 27, 1946, 18 months before the first pilings were sunk. Like the Browns, he had given back much to the city. He helped organize the board of trustees for the Walters Art Gallery, and was its first president.

"He dreamed practical dreams and made them come true," The Sun wrote in an editorial at the time of his death.

Almost three years later, Alexander Brown died at the age of 90. That snapped the company's 149-year link to its founder.

It fell to Griswold's sons -- Alexander Brown Griswold and Benjamin Howell Griswold III -- to carry on.

They quickly put their own imprint on the company after starting in the mid-1930s. Rather than buy low-risk bonds and preferred stock, they invested in solid companies whose shares had fallen to bargain prices. They hired a managing partner" to run the day-to-day operations. And they expanded by acquiring other firms and opening branches.

That strategy elevated Alexander Brown & Sons into a regional powerhouse. But its foundation was shaken in the mid-1970s when stocks tumbled. By December 6, 1974, the Dow Jones industrial average had lost 45 percent in 24 months. Brokerage firms everywhere suffered.

But, unlike other houses, Alexander Brown & Sons expanded in the face of the decline, hiring more employees and snapping up competitor Baltimore-based Robert Garrett & Sons Inc. in October 1974. The executives, knew that the firm couldn't stand still, even in a down cycle, and that growing would help propel it past the competition when the market recovered.

But the industry was changing. Deregulation would soon mean stiffer competition from a new breed of discount brokers. Firms began specializing. Institutional salesmen were hired to tend to big clients. Analysts became stars following specific industries. Traders handled large orders of stocks.

Alexander Brown & Sons beefed up its investment banking business and focused on health care, software, technology and media. Teams of investment bankers scoured the country looking for clients, even among small, obscure companies.

The effort paid off. In 1981, the firm took public Computer Associates International Inc., a burgeoning California software maker, and a giant in the industry today. Then, the floodgates opened. From 1984 through 1988, the firm took -- or helped take -- public Silicon Valley's biggest and best know technology companies: Microsoft Corp., Sun Microsystems Inc., Oracle Corp., Novell Inc. and Octel Communications Corp.

Suddenly, Alexander Brown & Sons was one of the hottest investment banking firms in the country. But to do bigger deals, it needed capital. On Feb. 28, 1986, the firm went public itself, raising $51 million. Its new parent became Alex. Brown Inc.

It was a heady time. But 19 months later, the stock market crashed again. Profit at Alex. Brown slid 63.6 percent and the stock price wallowed.

The firm was struggling. In early 1991, Chief Executive Officer Donald B. Hebb Jr. stepped down. After an exhaustive search, A.B. "Buzzy" Krongard, a tough-talking investment banker, was named CEO, on July 23, 1991.

Mayo Shattuck, a star investment banker in the firm's San Francisco office, became president and chief operating officer.

The two men cut costs, imposed tight controls and pushed employees to do better work.

The ex-Marine Krongard recalled: "How do you get a mouse to carry a piano up a flight of stairs -- you beat 'em."

It worked.

Buoyed by a strong stock market and Krongard's tough love, Alex. Brown's financial picture quickly improved. By 1996, the firm broke $1 billion in revenue and churned out a record $154 million in profit. Even while the firm thrived, big deals slipped away. Customers wanted a wider menu of services, and Alex. Brown couldn't meet their demands.

Losing business to the competition angered Krongard."It was crystal clear that we needed a lot more in capabilities to keep that growth rate up," said Benjamin H. Griswold IV, a direct descendant of both Alexander Brown and Benjamin Howell Griswold Jr.

"Every piece of business we ever lost, I get PO'ed," added Krongard. "Nobody sees the future, but we looked out into the future and saw the problem getting much worse."

The unthinkable

The crystal ball told them the unthinkable -- sell Alex. Brown Inc. It did just that in April 1997, to Bankers Trust Corp.

The courtship began when Griswold received a phone call from N.J. Nicholas Jr., a friend and former Princeton University classmate, who was also a Bankers Trust director. "We are thinking hard about the securities business. Would you have any interest in chatting?" the friend said.

Griswold put Frank Newman, Bankers Trust's chairman, in touch with Krongard.

Krongard's response was terse: "We're not for sale."

But by February 1997, competitive pressures were mounting.

Krongard, Shattuck, Newman and two other executives finally huddled inside Krongard's Baltimore County mansion to see if a merger was best. The executives met again in secret, but by April, word was leaking out.

Talks were turned up full flame, but the timing couldn't have been worse.

Krongard and Shattuck were booked at Florida's posh Amilia Island on a weekend retreat with star brokers. Between tennis matches and speeches, they managed to reach an agreement.

On Sunday, April 6, the firm was sold in a $1.7 billion blockbuster deal. "This merger is a superb fit," Newman proclaimed."We wanted to pick our partner rather than get picked," added Griswold.

The combined companies would have 18,000 employees, $123 billion in assets and offices in more than 50 countries. Alex. Brown shareholders would benefit nicely -- owning about 25 percent of Bankers Trust.

"It felt good then," said Krongard. "Our people would have ample opportunity to do their stuff."

Krongard became vice chairman and a director of the company, and Shattuck ran the global investment banking operation with a Bankers Trust counterpart.

The perfect marriage didn't last long.

Ten months after the deal was announced, Krongard resigned and took a top job with the CIA.

Other top executives resigned. Still, the merger seemed to be going well. By April 22, Bankers Trust stock soared to a high of $136.4375.

But cracks soon appeared. Cultures that needed to meld, clashed. Alex. Brown executives, who were used to controlling their budgets and making decisions, were stripped of power. Memos, which were always signed at Alex. Brown for accountability, arrived unsigned under Bankers Trust. It seemed no one at BT would take responsibility for anything.

It was more than that, though. People were shocked by Bankers Trust's lavish galas, expensive sponsorships and the private jet executives used. Some complained about Newman's wife, Lizabeth, saying she was meddling in the bank's affairs and influencing her husband's decisions.

"That caused a lot of bitterness," said a former director.

Newman's own personality also rubbed many wrong. A shy, soft-spoken man, Newman traveled like a rock star, chauffeured in limousines and flanked by bodyguards. He wore a cloak and beret, and he insisted that rooms be set at a specific temperature, sources said.

Alex. Brown executives tolerated Newman's eccentricities in the good times, but their humor faded when a series of problems pummeled the company.

On Sept. 1, 1998, Bankers Trust disclosed a stunning $350 million in trading losses, primarily in Russian markets. Subsequently, its debt was downgraded and it was among several banks that had to pay $300 million to bail out a hedge fund that was near failure. Bankers Trust shares plunged to the mid-$40s."

"It was a gut-wrenching time," Shattuck recalled. "I certainly felt responsible. I felt morally obligated to fix it."

Morale sank and rumors swirled that Bankers Trust was facing a liquidity crisis. Brokers received calls from nervous clients wondering if their money was safe. Grumbling filled the hallways at Alex. Brown. "It was everywhere," Shattuck said.

Shattuck met with employees to assure them that the problems would be fixed. "Honestly, there were a few moments when I didn't think things were going to be OK," he said.

He and other executives offered Newman advice on saving the bank. Krongard and Shattuck privately urged Newman to meet with Alex. Brown employees. Krongard gave Newman further advice: leave the limo and bodyguards at home, and "be one of the people."

Newman didn't listen. He took the corporate jet to Baltimore on Sept. 30, 1998 -- a team of bodyguards escorting him to the 14th floor where 200 Alex. Brown employees waited. His message was soothing to some, but others were furious.

"I think there were people who wanted to lynch him," said a former executive.

As the pressure mounted, Shattuck and another executive worked behind the scenes with the Bankers Trust board of directors to come up with a solution. The board called a meeting on Oct. 20 and Newman's job hung in the balance. But Paul Volker, a director and a former Federal Reserve Board chairman, argued to keep him, according to a source.

Frank Newman's job wasn't the only thing on the board's mind that day. Just 13 months after formally acquiring Alex. Brown, the board decided the only way out of the mess now was to sell Bankers Trust.

The mood only grew worse on Oct. 22, when the bank announced a staggering third-quarter loss of $488 million and said it would have to cut jobs.

One month later, on Nov. 29, Deutsche Bank AG agreed to acquire Bankers Trust, creating the largest banking company in the world."I'm excited and I'm relieved," Shattuck told employees at a meeting called to announce the deal.

Others felt differently. They spoke in mock German accents and later criticized Shattuck privately for feathering his nest with a $37.5 million pay package over three years.

There were more defections from Alex. Brown. In March, the head of equity sales and trading division was out. Two months later, 19 employees bolted to competitor Tucker Anthony. Brokers fled, and so did traders, many to competing firms.

The acquisition hadn't been completed when Mayo Shattuck was summoned to London. He already knew he would fight to retain the Alex. Brown name. But this was a major issue, and Shattuck was worried how it would go.

After fashioning a compromise on the name -- Deutsche Banc Alex. Brown -- Shattuck was relieved. "I was also enthusiastic. The sense that this was going to be a management team that one could reason with."

On June, 4, 1999, Deutsche Bank completed its acquisition. But the defections weren't over. Three weeks later, Credit Suisse First Boston launched a raid on Alex. Brown health's care unit, snaring 34 employees. Shattuck insists that those and the earlier departures didn't harm Alex. Brown. Some people were forced out, he said, and "others simply didn't want to work for a global company.

"I don't want anyone to think [the departures] had any damaging effect on the firm," he said. "We have hired an enormous amount of people. I am pretty comfortable where things are."

New muscles to flex

The smell of coffee on Sept. 28 filled the air as traders milled over a spread of pasta, salad and mashed potatoes on the 15th floor in Alex. Brown's trading room.

Suddenly, the lunch was interrupted by shouting from edgy traders. The firm was taking public Foundry Networks Inc., and everyone was whipped into a frenzy.""Buy it!" yelled a red-faced trader. Foundry's stock zoomed amid shouts, claps and whistles. Shares priced at $25 each rocketed within minutes to $156.25, making it one of the most successful initial public offerings of last year.

That was just icing on the cake.

In June, Alex. Brown raised $10 billion for Deutsche Telecom AG. In January, it helped raise $5.2 billion for Infineon Technologies AG, an international semiconductor company. And last month it helped spearhead the break off of AT&T; Corp.'s Wireless Group in the largest public offering in U.S. history."

"That is what is cool about Deutsche Bank," said Doug Baird, co-head of U.S. equity capital markets at Alex. Brown. "There is just a lot of muscle now."

Other businesses within the company are rolling, too. The firm traded a record 38 million shares a day on average in the first four months of the year, compared with 19 million per day in the first four months of 1999. And revenue from its brokerage business jumped nearly 24 percent, to $413 million last year. In the first three months of this year, revenue was up 57 percent.

"It was the best year we ever had by far," said Thomas Schweizer Jr., co-head of the private client division. "The morale is better, the tone is better."

The booming market has helped. Rolf-E. Breuer, who heads Deutsche Bank, described the merger as "more successful and far beyond our hopes and expectations."

Breuer calls Alex. Brown a "real jewel," and believes that it has tremendous potential.

Deutsche Bank has given Alex. Brown executives freedom to run the operation that Bankers Trust did not. Three Americans head three of the parent company's biggest divisions. That includes Shattuck, who along with Yves de Balmann is co-head of Global Investment Banking and co-chairman and co-chief executive of DB Alex. Brown and Deutsche Bank Securities, which is one of the bank's biggest divisions with about 4,000 employees and $3 billion in annual revenue.

"It is a pretty big statement to take their German operations, their European operations and give them to a guy working out of Baltimore," Shattuck said.

Customers seem to like what they see.

Bobby R. Johnson Jr., chairman and chief executive of Foundry, said his firm has more exposure to European investors as a result of the merger. "They have great European connections," he said.

Daniel M. Snyder, owner of the Washington Redskins professional football team, retained Alex. Brown to sell his Bethesda-based Snyder Communications Inc., and plans to do more business with the firm."I would obviously count them in as an important relationship. We will be doing a lot of business with them," he said.

Although the new company is doing well, it faces serious challenges.

While Deutsche Bank is the largest investment banking house in Europe, it still trails giants like Merrill Lynch & Co., Morgan Stanley Dean Witter and Goldman Sachs Group Inc.

"They still lack a real significant presence in the United States," said Daniel Davies, an analyst at Chase Fleming in London. "What they do over the next couple of years will determine how successful they are."

The company also spent heavily to retain key employees, such as Shattuck, with three-year contracts.

"It is going to be a volatile situation in three years' time," noted Adrian Pilz, an analyst at Fox-Pitt, Kelton Inc. in London. "You may be looking at a franchise that has been lost."

Deutsche Bank has blundered from time to time. In April, a merger with Dresdner Bank AG collapsed after the companies couldn't agree on what to do with Dresdner's investment banking unit. There were rumors that Breuer would be forced out.

In the United States, Alex. Brown must convince clients and potential customers that it is not only the same firm, but a better one."In a way, we need to re-brand ourselves in the States," Shattuck said. "We are out telling a new story that people really haven't heard before."

Shattuck is confident that remaking Alex. Brown is achievable."Two or three years from now, there is going to be one significant player, and the odds are it is going to be us," he said. "We are going to win this game."

Griswold, senior chairman of Alex. Brown, also is optimistic about the company's future, and Baltimore's. "The firm has been very tightly linked with the fortunes of the city for a very long time," he said.

Although the company today is a far cry from the linen-import business that Alexander Brown began 200 years ago, Griswold is confident that his ancestors would be proud of the changes.

"The investment banking practice that the firm has built over the past 20 years or so, now gets to play on the world stage," Griswold said. "In the latter part of the mid-19th century, it really was a worldwide business. It really is once again."

Milestones in Alex. Brown History

1800: Alexander Brown arrives in Baltimore from Ireland and established a linen-import company bearing his name.

1808: Brown and a group of citizens form the BAltimore Water Co. to pipe fresh water into the city.

1827: Plans for the B&O; Railroad Co. are drawn up at George Brown's house.

1834: Alexander Brown dies of pneumonia at the age of 70. His son George Brown takes over the firm.

1861: Civil War starts and Alexander Brown & Sons stagnates.

1899: Alexander Brown, the great-grandson of the founder, reorganizes Baltimore's trolley system, and then its electric light companies.

1924: Benjamin Howell Griswold Jr., the son-in-law of great-grandson Alexander Brown, takes over the firm.

1929: Stock market crashes and the Depression begins. The firm struggles, but is bailed out by Alexander Brown, who taps his personal fortune.

1946: B.H. Griswold Jr., the financial architect behind the city's largest bank mergers and its vast bridge builing program, dies.

1952: Chesapeake Bay Bridge, finaced by millions of dollars in revenue bonds sold by Alexander Brown & Sons, is built.

1970: Alexander Brown & Sons builds its reseach and investment banking departments, and sow seds to take public fast-growing companies across the country.

1974: In the depths of a bear market, Alexander Brown & Sons expands by acquiring competitor Robert Garrett & Sons.

1981-88: Alexander Brown & Sons takes public some of Silicon Valley's hottest companies, including Computer Associates, Sun Microsystems and Microsoft Corp.

1986: Renamed Alex. Brown Inc., the firm goes public, raising $51 million.

1991: A.B. "Buzzy" Krongard is named chief executive of Alex. Brown Inc., and Mayo A. Shattuck III is named president and chief operating officer.

1997: Alex. Brown Inc. is sold to Bankers Trust Corp. for $1.7 billion.

1998: Unrest grows as top-level executives leave the company. Bankers Trust announces a staggering $488 million loss in the third quarter, and calls for job cuts.

1999: Deutsche Bank acquires Bankers Trust Corp., including Alex. Brown.

2000: Deutsche Banc Alex. Brown celebrates its 200th anniversary.

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