Content area
Full Text
For the past two years Jeffrey C. Keil has sought to diversify the business of Republic New York Corp., the $28.79 billion parent of Republic National Bank of New York.
Despite a sophisticated trading operation and a worldwide private banking practice, Republic National had been burnt on loans to developing countries. Mr. Keil, Republic's president, wanted to do more local business.
At the same time, John A. Pancetti, chief executive of Manhattan Savings Bank, was trying to figure out the best way to insure that thrift's survival.
Thanks to deft management the $3.1 billion thrift was far sounder than many of its rivals. But it was only a matter of time, Mr. Pancetti calculated, until a sluggish real estate market and rising costs pummeled profits.
So it seemed natural for Republic and the 140-year-old mutually held thrift to merge. Manhattan gets Republic's commercial banking and investment expertise. Republic, which already owns the $3 billion Willamsburgh Savings Bank, gets further diversification by buying a thrift boasting deposit rich branches -- $170 million in each -- and low costs.
"It is a very good business," says Mr. Keil.
The deal seems perfect except for one thing: Manhattan's depositors may not be getting top dollar.
Sometime in the second quarter of this year they will be asked to approve the deal and offered the chance to buy 4.5 million shares of Republic's stock at $44.69 per share. Since Republic stock was recently trading at $48.50, the automatic $3.81 per share profit becomes an incentive...