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Business
Bankers Trust Profit Off
Tuesday, April 27, 1999
By Mary Kelleher
NEW YORK (Reuters) - Bankers Trust Corp., which plans to be bought by Germany's Deutsche Bank AG this quarter, said Monday its first-quarter net income dropped 37 percent from a year ago to $140 million, but still exceeded Wall Street estimates.
The New York-based bank holding company, which reaffirmed its plan to merge with Germany's largest bank, earned $1.30 a diluted share in the first quarter, down from $2.01 a share in last year's first quarter. But it still beat the $1.08 a share that Wall Street expected it to earn, according to tracking service First Call.
Hit hard by last year's market turmoil, Bankers Trust scaled back risky positions in the quarter, especially in emerging markets, as it prepares to be acquired by Deutsche Bank for about $10 billion.
It also posted stronger trading revenues, as did a host of other Wall Street banks and brokers in the first quarter, although its investment banking profits dropped.
Bankers Trust's stock settled Monday at $90.0625, unchanged from Friday, slightly over the $90 a share in cash that Deutsche Bank plans to pay. Earlier Monday, Bankers Trust stock traded as high as $90.875 in composite New York Stock Exchange trading.
''Trading was the main driver,'' Diane Glossman, an analyst at Lehman Brothers, said. ''The company also continues to prepare for the advent of the Deutsche deal and reduce the size of its balance sheet and capital ratios. Investment banking wasn't particularly outstanding in the quarter because the leveraged side of the finance business has yet to really come back.''
The banking company, whose merger with Deutsche Bank is expected to close in the second quarter, saw trading and sales profits rise to $86 million in the first quarter from $64 million in the 1998 first quarter. The 1999 first-quarter trading results were bolstered by Bankers Trust's investment in troubled hedge fund Long-Term Capital Management. The giant fund was rescued from the brink of collapse last year by a group of leading banks. (cont)
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