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Ronale Kruszewski, Stifel CEO, and Thomas Michaud, KBW CEO, reveal what went into the decision for Stifel Financial to buy KBW for $575 million.
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-- making another acquisition announcing plans to buy KBW.
And a deal valued at 575.
Million dollars.
What's the motive behind today's major investment banking -- let's ask the two gentlemen -- charged joining us now.
Bronco chefs -- -- Stiefel financial chairman CEO and president and Thomas we showed.
KBW.
CEO.
And president well I I find -- -- so interesting -- because.
-- both have been around for a long time you both of held -- -- your companies and really work your way up through them but what wasn't about KBW.
Which is a little bit smaller than did Stiefel where you said house time to make this.
While it is the TBW is the preeminent.
Specialists and financial services not just the United States but globally it's a great opportunity for us to.
Add capability and our quest to be a premier middle market investment bank it's a great firm I've known Tom for awhile -- excited.
To do -- people say why now I say why not now.
Well Tom for those who weren't familiar with the work that you were doing we're focusing on small and midsize commercial banks -- -- -- interest in getting into marketplaces is they've been crushed I mean are they really never made a full comeback forgot what happened at 20072000.
That.
Do you see are are we on the verge of a comeback for those small midsize companies which actually is a good indicator of of small -- sources all over.
-- things are getting better as matter of fact financial stocks broadly are outperforming the market for the first time since 2006.
So we think that the rebound is starting now it's slow.
Because the economy's slow.
Very low interest rates still on helping banks but things are getting -- war than that 2% growth level that we've been seeing we see something bigger coming little bit better than that but certainly got closer to that and the double digits.
So it's a cash stock deal about ten dollars in cash -- another 750 in stock and what it's a -- of almost immediately after expenses.
After weak case and expenses we believe the deal was five to 7% accretive to -- rock star.
But -- -- looked at KBW brown did you say the one thing I want it was it the ability for them to get shares in IPOs for the clients was at the Vienna mayor then the investment banking opportunities because at a time on Wall Street is.
Moving away from that kind of thing I find it very interesting to be contrarian and you guys going forward and this.
Quietly accept it looked at all those things the capabilities are first class and we have been contrary we have made eleven acquisitions them.
Past number of the year want thank you -- back that was interest Tom Thomas Weisel partners saw as a young -- we've we've made in number and each one of those have added to our capabilities.
We have never we've had seventeen consecutive years of record revenue we bad -- people every year were growing.
People take issue with that I believe that now's the time to be investing not -- -- Tom.
KBW suffer tremendously in the 9/11 attacks was sixty employees were killed and that is 67.
67 employees were killed did that have anything to do with the with fortifying.
The spirit of the company.
Absolutely were very close -- firm our DNA is very strong.
And that's why we're delighted that we're gonna get a chance to keep our brand name is part of the Stiefel financial corporations can ask about how that has the pride of -- don't we have absolutely.
Absolutely so we've we've not had a lot of turnover over the years.
And and given our history we like to stay together and and we think -- a great opportunity.
Along with the Stiefel -- That's was that part of the negotiations was at an important part of it would make sure that you could say together kind of -- -- family.
-- talking Iran early on about how he saw the two companies coming together he say that it's very important I think that he's got a lot of confidence in our brand we have a lot of confidence in our brand.
And and we both felt that leaving -- the KBW brand is the right thing to do let me bring it to regulation and Dodd-Frank some of the rules have not yet been written but there's -- question of proprietary trading and and a lot of Wall Street set -- financial institutions affiliate that the you're hurting our ability to make money.
-- -- -- -- You know in many ways I do I think that -- -- is going to be very difficult to implement it might be against international law and some in some ways.
It's going to be difficult I frankly think the solution is much some -- And that is a form of Glass-Steagall.
But not legal separation -- -- to separate the depository.
System.
From the investment bank.
It's it's really that's how we're structured a -- -- on a bank but we can only do safety and soundness and our bank and we have an investment bank.
And just separate -- and don't don't have the taxpayers bailing out the invest.
And background this is that this is one of the first times ever to guide investment bag you say perhaps some form of -- the -- -- important go back to what about.
The ability of of financial institutions to have that open discount window to the Fed.
That's something new as well should that be cut off.
I think that while the Fed is there obviously for bank holding companies and but it was designed to Federal Reserve was designed as a lender of last resort for commercial banks not the financial that's right -- our our bank has access -- the -- but our investment bank to the cotton OK and so and -- and there's been rules for for a century.
That's separate did that make the banking affiliates.
Go according to rules.
It all the rules -- place we just need to separate -- that within a control groups that you can compete.
But protect the depository system -- got -- too far to try to collapse everything together but that's just my opinions here.
Well congratulation -- -- secondary I thank.
