Few banks in recent years have been forced to endure the humiliation that has rocked Bankers Trust New York Corp. Long regarded as extremely shrewd, innovative, and aggressive, Bankers was hit last year with scandals involving its sales of derivatives and several client lawsuits charging unfair sales practices and deception. Most tellingly, it was accused of putting its own interests ahead of its customers'. The bank is known for its ability to effect broad organizational shifts, and many observers predicted that Bankers would soon stage a major offensive to restore its reputation.
So far, though, Bankers has done little. Chairman and CEO Charles S. Sanford Jr. has publicly stated that Bankers will change its ways, particularly focusing less on transactions and more on client relationships. Yet the only concrete changes are a couple of new senior management committees on clients and internal controls and some cost-cutting. A bank spokesman says no major reorganizations are in the offing. Meanwhile, Bankers' performance has suffered. Return on equity dropped to 13.5% from 26.3% in 1993. The consequence: The bank is saddled with plummeting employee morale, a wave of defections, and rumors of looming staff cuts, even at senior levels.