MORGAN GRENFELL SAYS 1986 PROFITS HIT BY GUINNESS

  &lt;Morgan Grenfell Group Plc> said its
  1986 pre-tax profits were lower than forecast because of
  depreciation in the value of its Guinness Plc &lt;GUIN.L> shares
  and because of securities trading losses in the U.S.
      Morgan chairman Lord Catto said the losses on the group's
  seven mln Guinness shares in addition to a 3.5 mln dlr loss on
  its risk arbitrage operation in New York depressed profits some
  eight mln stg to 82.2 mln.
      He also told a news conference Morgan had received informal
  approaches about a takeover of the group but was not
  interested. No formal offers had been made, but Catto would not
  elaborate.
      Morgan Grenfell acted as merchant banker to Guinness during
  the brewing company's successful bid for Distillers Co Plc
  &lt;DIST.L> in the first half of last year.
      The U.K. Government launched an investigation into the
  affairs of Guinness last December. Public concern has focused
  on the way Guinness may have breached U.K. Company law and the
  Takeover Code by prompting others to support its share price
  during the bid.
      Morgan chief executive Christopher Reeves, head of
  corporate finance Graham Walsh and senior corporate finance
  director Roger Seelig all resigned in January over the Guinness
  affair.
      Another senior Morgan Grenfell executive, Geoffrey Collier,
  resigned late last year on allegations of trading on insider
  information. He currently faces criminal charges.
      Lord Catto said the second half of 1986 had been "one of the
  most traumatic in our history," but that clients and staff had
  been supportive.
      "I certainly look on the future in a positive way. We have
  the worst behind us and have swept nothing under the carpet."
      Profits for the year, up 19.4 pct from 1985 pre-tax profits
  of 68.8 mln stg, were mainly due to a high contribution from
  corporate finance activities and progress in asset management.
      Finance Director David Ewart told the news conference the
  performance of the group so far in 1987 was "within reasonable
  touch of the budget."
      Lord Catto also said the group was actively seeking a new
  chief executive to replace Sir Peter Carey, who is acting as
  interim director after Reeves' resignation, and hopes to have a
  new chief executive within a few months.
      He also said Reeves and Walsh had been paid a total of
  562,000 stg in compensation following their resignations, but
  declined to say how much each man got. Negotiations were going
  on to determine an amount of compensation for Seelig, he said.
      Morgan Grenfell shares stood at a late 366p, 9p down on
  yesterday's 375p.
   REUTER...
  

