Two months ago, Stephen Saali had plans. The bank of which he is president, Republic New York Corporation, had been through a rough six months. Republic, which is ultra-conservative in its approach and proud of it, had tarnished its image with a $200 million loss betting on Russian treasury GKOs during the Russian crisis, and reported a third-quarter loss as a result.
According to Saali, who is 34, there were two main reasons for getting into Russia. "We've always been primarily a private-banking institution, but we have over the years added businesses to diversify somewhat, as well as to improve returns. Getting into the Russian GKO market was part of that."
But by April that painful episode was history. Republic's share price had soared into the $60-plus range, way above its low of $36 last September, a new management team was in place, and a restructuring plan to focus on its core businesses and increase returns had been announced two months before. The bank had announced the closure of its section 20 securities and derivatives trading arm. Plans were announced to reduce expenses by $67 million, 560 jobs (7% of the workforce) would be cut, and a greater integration of domestic and international private banking activities with a more streamlined management structure would bring in more savings.