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DLJ joins Russia hit roster
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September 2, 1998: 11:57 a.m. ET
Investment firm says it earned $40M pre-tax in first two months of 3Q
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NEW YORK (CNNfn) - The casualty roster of investment banks hit by Russia's turmoil grew longer Wednesday as Donaldson, Lufkin and Jenrette blamed Moscow's financial tailspin for an erosion in its third-quarter profits.
DLJ (DLJ) said Wednesday it earned pre-tax income of roughly $40 million in the first two months of its third quarter, ending Sept. 30. In last year's third quarter, DLJ, which has offices in 14 cities in the United States and 11 cities in Europe, Latin America and Asia, had pre-tax profit of $188.1 million.
Wall Street analysts had expected the investment firm to earn 79 cents a share in the third quarter.
DLJ joined a star-studded parade of leading financial services firms -- including Citicorp (CCI), Bankers Trust Corp. (BT), Morgan Stanley Dean Witter & Co. (MWD), British-based Barclays PLC (BCS) and Nomura Securities of Japan -- to report losses directly tied to exposure to Russia's buckling markets.
Bankers Trust, the nation's seventh-largest U.S. bank holding company, said Monday it expected to post a net loss for the third quarter. The bank said that of the $350 million it lost in July and August, $260 million was due to hits from Russia.
Meanwhile, Citicorp, which is still awaiting regulatory clearance for its blockbuster merger with Travelers Group, said late Monday Russia-related losses will pare its third-quarter profits by an estimated $200 million.
Nomura Securities has tallied losses this year of $350 million due to Russia's woes.
It remained uncertain Wednesday whether the banks ultimately will recover a portion of the losses. Russia's acting prime minister, Viktor Chernomyrdin, has hinted in recent days that Russia may seek to revise a $40 billion debt restructuring on terms more favorable to foreign lenders.
But whether such a move comes to pass will depend in large part on the outcome of a political donnybrook between the Communist-led parliament and Russian President Yeltsin.
Many financial firms made their money in Russia last year, when the country's nascent market grew 150 percent, making it a leader among emerging global exchanges.
This year, by contrast, Russia's market has lost more than half its value, precipitating a de facto devaluation of the ruble last month, a near-collapse of the banking system, and the imposition of a 90-day moratorium on the repayment of ruble-denominated short-term debt. 
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