Charles S. Sanford Jr. got rave reviews for his performance at an April dinner he hosted for Wall Street analysts. The Bankers Trust New York Corp. chairman and CEO was gracious with his guests and openly discussed his bank's operations and his goals for 1995. "He was terrific," says David S. Berry, director of research at Keefe, Bruyette & Woods Inc. "Just what you'd want."

Except for one thing: Sanford didn't say that within the next month, he would announce his plans to retire in 1996, when he turns 60. Then on June 22, 48-year-old Chief Financial Officer Timothy T. Yates followed suit, disclosing plans for early retirement next summer. Bankers vehemently denies that the planned departures are anything but voluntary and routine, and the bank's directors would not discuss them.

UNSTABLE. The uncertainty that situation creates, though, underscores the fact that Bankers Trust remains in a state of upheaval. After a year marred by client complaints and lawsuits surrounding its derivatives business, the bank appears unable to find stable ground. The planned departures of Sanford and Yates follow a raft of resignations by some of Bankers' top talent (table). And the market for exotic derivatives, a key one for Bankers, is in a slump.

Bankers has a gaping hole where a succession plan should be. Its board, led by former Philip Morris Chairman Hamish Maxwell, plans to conduct a wide-ranging search for a successor, but it has yet to retain an executive search firm for the job. People familiar with the situation think it is unlikely Bankers will fill either the CEO or CFO job before next year.

Now, with a vacuum looming at the top, many investors and analysts question whether Bankers Trust can remain independent. "I've got to believe that from a financial and strategic point of view, the whole option of pursuing a strategic partner would have to be in consideration," says Judah S. Kraushaar, a banking analyst at Merrill Lynch & Co.

Market sources say Charlotte (N.C.) NationsBank Corp. may be considering a bid for the big New York bank. Investment bankers are also talking to foreign banks and other clients about the logic of an offer for Bankers Trust. "Is the situation unstable and susceptible to a friendly merger? Yes," says a former Bankers executive who resigned recently. Bankers and NationsBank say they will not comment on rumors.

Analysts believe Bankers could fetch close to $6 billion in a takeover. For that, however, a buyer would get a bank hit by a rash of resignations. A spokesman says the number of departures this year is normal. Perhaps, but since January, Bankers has lost most of its emerging-markets group, its mergers chief, and numerous others.

ACTIVE BOARD. The departures come after a year in which net income dropped 38%, to $615 million. In 1994, Bankers Trust settled a derivatives-related lawsuit by Gibson Greetings Inc. and fraud charges brought by the Securities & Exchange Commission and the Commodity Futures Trading Commission, while agreeing to revamp some sales practices and controls under the Federal Reserve Board's supervision.

Now, sources say that the bank's directors, particularly Maxwell and former IBM Senior Vice President George B. Beitzel, are actively involved in running Bankers today. Maxwell did not return calls, and Beitzel declined comment. A company spokesman says that "the board is in a period of acute activity within their traditional roles."

Even with their involvement, though, Bankers' prospects don't look great. Several rating agencies have lowered the bank's credit ratings, creating an extra hurdle for it in the derivatives market. Analysts expect that after a $122 million first-quarter loss, earnings will be less than half 1994 levels. And a lame-duck executive suite may be hard-pressed to turn things around. It's hardly a formula for long-term independence.


Bankers Trust executives who have bailed out in 1995


Chairman and chief executive officer


Chief financial officer


Head of emerging markets


Head of mergers and acquisitions


Head of global finance sales


Business manager, individual services group

*Resignations effective in 1996


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