Shearson Lehman Bros., the largest U.S. broker in terms of capital, said Thursday that it will change its name today to Shearson Lehman Hutton Inc. and is considering beefing up its merchant banking operations.
The change of name reflects the $1-billion acquisition of E. F. Hutton & Co. announced December.
The merger, involving layoffs of 5,000 Shearson and Hutton employees, is expected to be completed during the first quarter of 1988. The new firm's parent will be known as Shearson Lehman Hutton Holdings Inc.
The merger makes Shearson by some measures the largest brokerage in the United States, although it trails rival Merrill Lynch in number of brokers and revenue.
Shearson, which is majority-owned by American Express Co., also said it was thinking of launching a number of investment funds to allow financial institutions to co-invest with it in merchant banking deals, a company spokesman said.
The spokesman declined to say how much capital Shearson would expect to raise through the funds, but one company official put the figure at "hundreds of millions of dollars."
On Monday, the company reported a fourth-quarter loss of $95 million, compared to a profit of $106 million a year earlier. Its revenue of $1.3 billion was unchanged from the previous year's quarter.
Revenue for the whole of 1987 was significantly improved over 1986, thanks to one of the biggest rallies ever on Wall Street during the first three quarters of the year. But the stock market collapse of Oct. 19 caused profit to slump dramatically in the final quarter.
The spokesman said Shearson Vice Chairman Peter Solomon, who co-heads the firm's investment banking division, may head the contemplated strengthened merchant banking unit. Merchant banking is currently part of investment banking, but would become a separate division under Solomon, the spokesman said.
A NAME IS BORN, AGAIN SHEARSON LEHMAN HUTTON 1960: Carter, Berlind, Potoma & Weill founded.
1962: Became Carter, Berlind & Weill.
1970: Became CBWL-Hayden Stone after merger.
1972: Became Hayden Stone.
1974: Became Shearson
Hayden Stone after merger.
1979: Became Shearson Loeb Rhoades after merger.
1981: Became Shearson/ American Express after merger.
1984: Became Shearson
1985: Became Shearson
Lehman Bros. after merger.
1988: Became Shearson
Lehman Hutton after merger.