AMERICAN EXPRESS SAYS ITS STRATEGY IS STABLE
American Express Co's <AXP> president
Louis Gerstner Jr. said a bear market will not effect his
company's long-term strategy.
    "I don't think where the market goes over any month long
period, two day period, or even six month period has anything
to do with our strategy," Gerstner told Reuters.
    "We have built a strategy for our company that looks out
over many years and anticipates a lot of change," he said.
    Gerstner said the company's long term strategy is to build
and maintain a major position in the financial and travel
service industries. American Express is the 69 pct parent of
Shearson Lehman Brothers Inc <SHE>.
    Gerstner would not comment on the share market tailspin.
    However, American Express chairman James Robinson said in a
statement that the company could endure the market turbulence
and was in a strong position for further growth.
    "All brokerage firms make money if the market goes down or
up," Gerstner told Reuters without elaborating.
    Gerstner said Shearson had no plans to quit its municipal
bond activities. "Shearson Lehman Brothers tends to adjust to
trends in incremental steps. You will see it doing less of the
convulsive one-time changes that people in this industry will
go through," he said. Shearson recently laid off 150 people in
London and is limiting hiring, but Gerstner said American
Express remains committed to the London market and to having a
global presence.
    "That Shearson let a couple of hundred people go in London
is not even an anthill on the landscape we're discussing. We
are discussing long-term strategy," Gerstner said.
    Earlier this year, American Express sold 13 pct of its
stake in Shearson to Nippon Life Insurance Co of Japan and a
further 18 pct to the public. Gerstner said these moves "had no
implications of an exit from financial services."
    "Our committment globally is represented by the Nippon
tie-up which dwarfs the fact we decided to reduce the size of
one department, in one company, in one of our subsidiaries," he
said.
    Many securities firms now are stressing merchant banking to
bolster earnings hurt by bond market volatility, slow retail
business and a drop in underwriting volume.
    When asked if more players would make the system more
risky, Gerstner said, "I can't comment on other firms, but
Shearson is not going to follow a feeding frenzy in the
direction of merchant banking. We are not going to overreach."
    Gerstner also spoke about securitization, or the
repackaging of debt as marketable securities.
    "It is almost imperative to create a security backed by the
funds flowing from an LDC (lessor developed countries) debt
program. It is going to happen, but it is very difficult to
create a security in the current climate," Gerstner said.
    "Securitized products could be structured for either the
retail or institutional markets," Gerstner said.
    "If you look at the junk bond phenomenom, it started out
with mostly institutional buyers. Primarily through mutual
funds, individual buyers became a presense in the market. I'd
guess we'd see a similiar situation in LDC debt," he said.
    "The fundamental thing that has to happen (before there can
be sucessful securitization) is that the debt burden on the
countries has to be reduced, and the amount of money coming
from the commerical banks and the future call for money on
commercial banks has to be reduced," Gerstner said.
 Reuter
