Shearson Lehman Hutton Inc. overhauled its operations this week, reviving a respected investment banking name and dumping a vestige of its expansionist 1980s in a bid to rebound from record losses on Wall Street.
The restructuring marks another step by parent American Express Co. to reverse the fortunes of the nation's second largest brokerage, which lost $915 million in the first three months of the year.Shearson said it was grouping into two divisions from four: Shearson Lehman Brothers for individual investing and asset management, and Lehman Brothers for investment banking and capital markets activities. The full firm will be known as Shearson Lehman Brothers Inc.
In the investment banking division, Shearson hopes resurrecting the 140-year-old Lehman Brothers name will mean more respect and cachet during one of the slowest periods in Wall Street history.
"We hope the Lehman Brothers name will have the magic still," Shearson Chairman and Chief Executive Howard L. Clark Jr. said in an interview. "A little magic wouldn't hurt."
Shearson acquired the Lehman Brothers Kuhn Loeb Inc. investment bank in 1984 as part of a rapid growth strategy during the deal-heavy '80s, dubbing the new firm Shearson Lehman Brothers Inc. - same as the new one.
Lehman Brothers dates to 1850, when it was founded by immigrants from Bavaria as a commodities house in Montgomery, Ala. The investment bank was among those dominating Wall Street in the early 1900s.
About 1,000 Lehman brothers veterans still work at Shearson, the No. 2 brokerage behind Merrill Lynch & Co.
Under then-chairman Peter Cohen, Shearson acquired E.F. Hutton & Co. shortly after the 1987 stock market crash.