RayJay Seals Deutsche Bank Acquisition, with 90% Retention
Raymond James Financial closed its deal to buy Deutsche Bank’s U.S. private client group with around 90% retention of its brokerage force, the Florida-based company said Tuesday.
Despite higher-than-expected integration costs and concerns about delays, Raymond James ended its nine-month effort with an additional 193 advisors in 26 branches, close to its projection last February that it expected to retain 92% of the Deutsche Bank brokers. Raymond James as of June 30 had 6,834 brokers, including 2,000 full-time branch employees and another 4,000 at Raymond James Financial Services, its independent channel.
The new Alex. Brown unit, whose brokers were wooed with promises that they would be able to retain their cohesiveness as a separate unit within Raymond James, generally work with wealthier clients than brokers in its other channels.
While some Deutsche brokers have jumped to competitors such as Wells Fargo Advisors and UBS Financial Services, several industry recruiters credited Deutsche Private Client Services head Haig Ariyan with negotiating a strong deal and for conceiving the Alex. Brown concept. The name derives from the old Baltimore-based investment bank Alex. Brown & Sons, whose retail brokerage unit Deutsche Bank AG absorbed in 1999. Ariyan is remains as president of the new division.
Alex. Brown brokers, who were given retention bonuses of up to 125%, will retain access to new-issue stock allocations from Deutsche Bank for seven years and to “new alternative investments and other sophisticated investment solutions [for] existing and future ultra-high-net-worth clients,” Raymond James said in a news release.
It is uncertain, however, whether Alex. Brown brokers will will be able to replicate the same lending, credit and sophisticated trading services that they enjoyed at Deutsche Bank, some recruiters said. The German bank continues to operate a private banking unit in the U.S.
“Raymond James paid them some money, so they’ll sit in their seat for a year and see what comes of it,” said Jonathan Manela, founder of a Edge Strategy Group, a recruiting firm in Greenwich, Conn. that has done business with Raymond James.
“To the extent that they’re able to replicate some of the solutions that existed for the ultra-high net worth client or institutional relationship that existed at Deutsche Bank or the legacy Alex. Brown, these guys will stay interested.”
Ariyan’s negotiations, in any case, proved more successful than those of colleagues at other foreign banks that last year abandoned their U.S. brokerage operations.
Credit Suisse AG, for example, urged its U.S. force of some 300 brokers to move to Wells Fargo Advisors, which ultimately recruited just over one-third of them. Wells, which said it was being selective on the brokers it desired to hire, landed just over 100. Credit Suisse, for its part, launched a raiding suit against UBS for recruiting so many of its U.S. brokers.