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U.S. Bancorp's decision to spin off its Piper Jaffray unit to shareholders, announced last week, was about the only option left to the Minneapolis-based commercial bank. The bank had been rumored to be exploring a sale of its troubled investment banking division, but Piper Jaffray's potential liabilities and grim business prospects were apparently so serious that no buyer emerged.
Cross-town rival RBC Dain Rauscher, the investment banking arm of Royal Bank of Canada, was considered the best hope for a marriage partner, according to sources close to Piper Jaffray. But sources close to RBC said the institution had little interest. "[RBC only would have considered it] if they wanted to sell it for pennies on the dollar," said the source.
The problem? In addition to suffering from the downturn in equity underwriting and M&A activity, Piper Jaffrey has more than its share of legal problems. And those probably aren't...