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. Last Updated: 07/27/2016

Chase Buys Flemings, Enters Equity Market

After taking over British investment bank Robert Fleming & Co. Ltd.’s international business, U.S. banking giant Chase Manhattan is rolling into the turbulent but potentially lucrative Russian stock market.

The British bank’s local subsidiary Fleming UCB, for its part, is getting ready for big deals, betting that the addition of Chase’s Russian debt instruments to its core business will strongly boost its operations.

"From our point of view, it’s a good match," said Mark Jarvis, managing director with Fleming UCB in Moscow, in a telephone interview Tuesday. "We now have a full armory."

Murad Megalli, country officer with Chase Manhattan, was traveling this week and was not available for comment.

Flemings has traditionally focused on equity operations and asset management, while Chase Manhattan has built a strong presence in the debt and fixed-income markets, so the acquisition could have strong synergic effects.

Chase’s new strategy for Eastern Europe, Middle East and Africa is now being pieced together in London.

For Flemings, the acquisition by a big parent means moving into business of a new scale.

"The major change to our business will be that we will be after larger clients rather than small, retail clients," Jarvis said.

Flemings first entered Russia in 1992 and opened a representative office to launch two funds — Fleming Russian Securities Fund and Venture Capital Fund — two years later.

It now has about $500 million in Russian securities under management through various offshore vehicles.

Just months before the 1998 crisis, Flemings bought into United City Bank to get a broker’s license and strengthen its foothold in the local market.

At the time of the deal, industry sources said sellers fetched a hefty $24 million for a 60 percent stake in United City Bank, while the remaining 40 percent was left in the hands of management and employees.

After the Chase acquisition is completed, the company will be branded Chase Manhattan, with the exception of asset management, which will retain Fleming’s name.

"I have an impression that their risk management has already become more conservative," said Andrei Galperin, managing director with Prospect brokerage. "But even with Chase, they have a long way to go up, because money is not all you need to make it to the very top."

With a turnover of $367 million, Flemings was No. 7 in terms of trading volumes in the Russian Trading System in August. It took the sixth spot last year with sales of $217.6 million.

With assets of $406 billion at the end of 1999, Chase Manhattan, founded in 1799, is the No. 2 bank in the United States behind Bank of America.

Robert Fleming & Co. Ltd., founded in 1932, originated from a banking business founded in 1873 and is one of the oldest British banks with ?70.4 billion ($102 billion) under management.