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Bankers Trust Stock Soars on Rumors of Sale

Securities: Nation's seventh-largest bank denies speculation--but that doesn't hinder trading.

September 19, 1997| From Bloomberg News

Bankers Trust New York Corp. denied it is in sales talks after takeover speculation drove its stock up as much as 13% on Thursday.

"Bankers Trust is not engaged in discussions or negotiations about a business combination with any firm," the nation's seventh-largest bank said in a statement.

Bankers Trust shares, which rose $5.69, or 5%, to close at $124 on the New York Stock Exchange, had surged to $133.63 before being halted ahead of BT's announcement. That didn't put the takeover rumors to rest.

"The reason the stock is up again is that the market doesn't believe" BT's denial, said Art Hogan, a block trader at Morgan Stanley, Dean Witter, Discover & Co.

UBS Securities Inc. may have fueled the rise. Sales persons from the firm called customers Thursday recommending they buy Bankers Trust shares, said Stephen Berman, an analyst at Stein, Roe & Farnham, which owned 328,125 Bankers Trust shares at the end of June. The sales people told investors that UBS analyst Thomas Hanley had said Travelers Group Inc. was to acquire the company for more than $160 a share, Berman said.

Hanley told CNBC he is confident BT will be acquired by Travelers, despite the company's denial.

"Speculation this morning may have caused the parties to change the timetable for discussions," Hanley told CNBC.

Travelers spokeswoman Mary McDermott declined to comment about the analyst report. Hanley didn't return calls. Travelers shares rose 88 cents to close at $70.75 on the NYSE.

Bankers Trust Chairman and Chief Executive Frank Newman and other top executives were in Beijing and weren't available to comment, spokesman Doug Kidd said.

New York-based Travelers sells insurance, makes loans and owns Smith Barney Inc., the second-largest U.S. brokerage firm. It couldn't buy Bankers Trust unless the bank forfeited its banking charter, lawyers said.

"Because of the insurance activities of a company like Travelers, it would be illegal for them to control Bankers Trust," said John Walker, a partner at Simpson Thacher & Bartlett who advised Chemical Banking Corp. in its acquisition of Chase Manhattan Corp.

Giving up the charter, which would prohibit the bank from accepting deposits, would take at least six months, he said.

"There are rumors that Bankers Trust is for sale," said Brown Bros. Harriman & Co. analyst Raphael Soifer, though he said he doesn't believe the speculation.

"They just bought Alex. Brown, and they have a long-term strategy in place. Even if they were interested in selling, it wouldn't make sense to sell now, when the returns on equity are in the mid-teens, and they have a plan to boost those returns."

Speculation about mergers in the banking and brokerage industries caused stocks to gyrate since Bankers Trust agreed to buy Baltimore-based broker Alex. Brown Inc. for $1.7 billion in April, sparking a wave of acquisitions.

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