LONDON — S.G. Warburg Group said fiscal 1995 profit at its investment bank will fall well below forecasts, raising questions about the value of the business one day after Swiss Bank Corp. said it wants to buy it.
Warburg shares fell 3% from their highs for the day on the London Stock Exchange, closing down 11.2 cents at $13.02. Analysts had been expecting Warburg's investment bank, Britain's largest securities firm, to break even for the year.
Earnings estimates for Warburg were slashed, and analysts now predict a loss of $80 million to $160 million in the year ended March 31. They said such losses could wipe out most of the expected gains from the company fund management division, Mercury Asset Management.
"I think the investment bank lost 100 million pounds ($160 million) for the second half of the year," said Stephen Kirk of NatWest Securities Ltd. "And if they've lost that much, that means they're losing 15 million ($24 million) to 20 million ($32 million) a month."