Canadian Bank Unit to Acquire Ferris, Baker Watts

Ferris, Baker Watts, a Washington investment bank whose roots date back more than a century, will be acquired by Royal Bank of Canada, giving Canada's biggest bank a foothold in the mid-Atlantic.

Ferris, Baker Watts is a private company with more than 900 employees, $18.5 billion in assets and 42 offices in 10 states and the District. The firm is highly regarded in the regional financial landscape, helping companies sell stocks and bonds and advising on corporate takeovers.

"It's probably a very good deal for the people at Ferris, Baker Watts because there will probably be a certain amount of independence for them," said Lewis Sosnowik, a bank analyst with Koonce Securities. "If they were bought out by Merrill Lynch or somebody, there would be a dramatic change in operations."

Ferris, Baker Watts dates to the turn of the 20th century, when Sewell S. Watts Sr. and his friend William G. Baker Jr., both University of Maryland graduates, opened a banking and investment house in downtown Baltimore.

Over the years, the company developed into a firm catering to wealthy Baltimoreans. In 1974, Baker, Watts & Co. moved to the then-new, 42-story USF&G building in Baltimore's Inner Harbor.

Wracked by the 1987 stock market crash and from lawsuits by clients hurt by a tax shelter collapse, Baker, Watts was acquired by Ferris & Co., of Washington, to form Ferris, Baker Watts.

Ferris, founded in 1932, had $16.7 million in capital, while Baker, Watts had $5.5 million. As a result, George M. Ferris Jr., chairman of Ferris and son of the founder, became chief executive of the new firm and moved it to Washington.

The purchase is slated to close by this summer and will require approval by U.S. and Canadian regulators.

The purchase, whose price wasn't disclosed, allows Royal Bank to take advantage of the soaring Canadian dollar to expand.

RBC Dain Rauscher is a subsidiary of the Royal Bank of Canada and is handling the acquisition. The subsidiary's president and chief executive, John Taft, said in a statement yesterday that FBW will help the bank build a stronger presence on the East Coast and in the Midwest.

"FBW represents a strong strategic and cultural fit for the U.S. wealth management business of RBC," Taft said.

Canadian laws prohibit banks there from buying one another, so the companies are looking elsewhere to expand. Royal Bank of Canada bought J.B. Hanauer & Co. of Parsippany, N.J., in May and American Guaranty & Trust of Wilmington, Del., in October 2006.

"The Canadian dollar is now even with the U.S. dollar, so stuff is cheap for them down here," said Peter G. Fitzgerald, a former U.S. senator and the chairman of Chain Bridge Bank in McLean. "You are going to be hearing the name Royal Bank of Canada a lot more in future years. It has none of the subprime exposure that U.S. banks have, and it has a big war chest. This is their first entree into the mid-Atlantic region. You are going to see them come down here and possibly put together a nationwide network of banking operations and broker-dealer operations."