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The Banker's Banker

Troubled financial firms are turning to Lazard's Gary Parr for help.

Gary Parr, the deputy chairman of Lazard, has been in high demand of late. The veteran deal maker and adviser has been tied up round-the-clock by the senior managements of giant financial institutions, from those in trouble, like Fannie Mae and Lehman Brothers Holdings, to those acting as rescuers, like Mitsubishi UFJ Financial Group . In early September he counseled Fannie to accept U.S. federal government conservatorship, and he guided former Lehman CEO Richard Fuld Jr. just before the firm’s September 15 bankruptcy. (He subsequently urged Lehman to sell its North American investment banking and capital markets businesses, among other assets, to British bank Barclays for $1.35 billion and continued to work on Lehman asset sales, including that of its asset management businesses to management for approximately $1 billion in December.) D uring September and October he advised Mitsubishi on its $9 billion investment in Morgan Stanley.

For Parr, 51, this burst of business at an extraordinary time for the markets was the culmination of 26 years of working exclusively as a banker to financial institutions, during which he built up a unique base of knowledge, contacts and, not least, perspective. "In an environment like this, clients are looking for someone with experience and judgment," Parr says. "It helps that I have done a lot of transactions over the years all around the world, that I’ve seen different types of circumstances and been through different issues, dealing with different cultures."

Parr started his career at First Boston Corp., moved to Wasserstein Perella Partners and cemented his status as the go-to financial institutions banker at Morgan Stanley before rejoining Bruce Wasserstein, now chairman and CEO of Lazard, in 2003.

Few bankers can match his global experience. In December 2007, Parr advised China Investment Corp. on its $5.6 billion investment in Morgan Stanley, and in January 2008 he counseled the Kuwait Investment Authority on its $3 billion stake in troubled Citigroup.

Clients such as former Bear Stearns Cos. CEO Alan Schwartz, who sought Parr’s advice several months before submitting in March to a government-backed shotgun marriage with JPMorgan Chase & Co., turn to the investment banker, confident that they will receive straight advice — even if it’s not what they want to hear. During the weekend of March 15, Schwartz faced a tough choice: file for bankruptcy or sell his firm to JPMorgan for $2 per share — a 93 percent discount to its market price — in a deal backstopped by the U.S. Federal Reserve Board. Parr urged him to accept the deal, on the grounds that there would be less value for shareholders in a postbankruptcy fire sale and that doing so would preserve the option of extracting more money later. JPMorgan subsequently raised its bid to $10 a share. "Gary’s advice is based on what’s best for the client, whether or not it leads to a transaction," says Schwartz, a respected deal maker himself.

Such work pays off: Lazard generated $184 million in revenue in 2008 advising clients in Parr’s areas of expertise, finance and insurance. It ranks ninth in the sector behind two much larger businesses, eighth-place UBS, with $289 million, and seventh place Citigroup, with $291 million. Merrill Lynch & Co. ranked first, with $487 million. Within Lazard, financial institutions produced 17 percent of all mergers-and-acquisitions revenue for the past 12 months, second only to industrials, with 32 percent.

Tall and lanky, the North Carolina native has a keen interest in ethics. He founded the Parr Center for Ethics at his alma mater, the University of North Carolina at Chapel Hill, to give students a theoretical framework. Parr, a frugal sort who says he cuts his own hair, predicts that the downturn in financial services will be a long one. He believes the days of returns in the mid-30s — such as Merrill Lynch and Goldman, Sachs & Co. achieved in the late ’90s — won’t be back anytime soon. "I expect returns on equity to average in the midteens and to have less variability for some time in the future," he says.