A deal that could hurt lofty Lazard

BRUCE Wasserstein, the veteran American financier who now heads blue-chip investment bank Lazard, has been described as the 'boldest, most imaginative deal-maker in Wall Street history'.

His decision to buy the somewhat down-at-heel stockbroker Panmure looks decidedly at odds with this reputation.

For starters, Lazard is a lofty outfit containing some of the finest brains in the Square Mile. It is that rarest of creatures, an independent investment bank that has prospered since the City's Big Bang in 1986 because its high quality advice has always been untainted by the whiff of conflicts of interest that have dogged the big integrated firms that combine banking, broking and jobbing.

Belatedly, Lazard has decided to add broking to its repertoire. But rather than opt for the much-touted merger with its fellow City blueblood Cazenove - with which it has always worked closely and which boasts a pantheon of FTSE 100 clients - it has snaffled Panmure, whose customers are largely a rag-tag of comparative also-rans.

Certainly, Wasserstein has not paid much for Panmure. But he has got a lot less than he started to bargain for.

While Lazard was locked in talks with the broker's former owner, WestLB, wily Collins Stewart swooped on Panmure's convertibles team, believed to be the powerhouse of the business and responsible for generating about half its revenues.

It should also be noted that to many of the companies on its books, Panmure is joint broker rather than acting alone. This makes it far easier for clients to defect. And changes of ownership, with their knock-on unsettling effect on senior staff, have a nasty habit of precipitating such shakeouts. Clearly, Lazard has its own top-notch clients and it will be hoping Panmure will be able to move in and build a corporate broking service for them.

Meanwhile, Wasserstein's people will expect to start providing mergers and acquisitions advice for those who remain on Panmure's books.

But the deal will bring conflicts of interest because Panmure will be selling shares in companies to institutional investors.

The tensions may not be as great as they would have been if Lazard had climbed into bed with the much mightier Cazenove, which has its own deeply ingrained culture and would not take kindly to being told what to do by a new master. But for Lazard, which has been doing things its own unique way for so long, there are risks in trying to integrate a broking business, and its ability to boast of providing independent advice will be undermined.

It would be a pity indeed, if Lazard's fine reputation were to be sacrificed on the altar of Wasserstein's drive for a deal - and such a second rate one at that.

Sainsbury loses its sparkle

JUSTIN King will be taking a very deep breath indeed tomorrow morning when Sainsbury, the supermarket group where he is about to become chief executive, produces its Christmas trading statement.

Sainsbury won't have horrors to declare like a Poundstretcher or a Matalan. After all, turkeys and sprouts are the last thing consumers cut back on in the festive season.

But the group's performance is unlikely to look as sparkling as that of lower-price rivals such as Tesco and Asda. Retail pundits expect Sainsbury to report a like-for-like sales growth of 2% - not a disaster, but hardly the glitzy 10% - plus that Morrison reported last week. There is even speculation that the group feels it needs to offer up a sacrificial lamb to pacify shareholders and that managing director Stuart Mitchell - who applied for the job King landed - may be targeted.

Christmas was also the first real test of the new distribution and technology systems introduced by the present chief executive, Sir Peter Davis.

They are supposed to make empty shelves and gaps where the organic potatoes should be a thing of the past.

Davis promised shareholders that they would finally see the fruits of his three-year turnround programme by this spring. The omens are not good if my local Sainsbury, which often resembles something you would expect to find in less salubrious parts of the Third World, is anything to go by.

One consultant working on the project, which is being managed by the giant consultancy group Accenture, branded the system as 'chaos'.

And adding to the company's travails, there has been a dispute with distribution workers at its Haydock distribution centre where stoppages have affected about 70 of its northern stores, despite the implementation of contingency plans.

For King, who was head of Marks & Spencer's highly successful food business, this is likely to be an uncomfortable welcome.

But having sat through his old company's tortured struggle to regain its pole position on the High Street, it may simply feel like a home from home.