&lt;Morgan Grenfell Group Plc> said its1986 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.
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