<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 1-5920
BANKERS TRUST NEW YORK CORPORATION
(Exact name of registrant as specified in its charter)
New York 13-6180473
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
280 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip code)
(212) 250-2500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No _______
Indicate the number of shares outstanding of each of the registrant's
classes of common stock as of July 31, 1996: Common Stock, $1 par value,
80,268,808 shares.
<PAGE> 1
BANKERS TRUST NEW YORK CORPORATION
June 30, 1996 FORM 10-Q
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Income
Three Months Ended June 30, 1996 and 1995 2
Six Months Ended June 30, 1996 and 1995 3
Consolidated Balance Sheet
At June 30, 1996 and December 31, 1995 4
Consolidated Statement of Changes in Stockholders'
Equity
Six Months Ended June 30, 1996 and 1995 5
Consolidated Statement of Cash Flows
Six Months Ended June 30, 1996 and 1995 6
Consolidated Schedule of Net Interest Revenue
Three Months and Six Months Ended
June 30, 1996 and 1995 7
In the opinion of management, all material adjustments
necessary for a fair presentation of the financial position
and results of operations for the interim periods presented
have been made. All such adjustments were of a normal
recurring nature. The results of operations for the three
months and six months ended June 30, 1996 are not necessarily
indicative of the results of operations for the full year or
any other interim period.
The financial statements included in this Form 10-Q should
be read with reference to the Corporation's 1995 Annual Report
as supplemented by the first quarter 1996 Form 10-Q.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 34
SIGNATURE 35
<PAGE> 2
PART I. FINANCIAL INFORMATION
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Increase
THREE MONTHS ENDED JUNE 30, 1996 1995 (Decrease)
<S> <C> <C> <C>
NET INTEREST REVENUE
Interest revenue $1,459 $1,520 $(61)
Interest expense 1,216 1,298 (82)
Net interest revenue 243 222 21
Provision for credit losses - - -
Net interest revenue after provision
for credit losses 243 222 21
NONINTEREST REVENUE
Trading 146 79 67
Fiduciary & funds management 198 166 32
Corporate finance fees 136 127 9
Other fees & commissions 82 84 (2)
Net revenue from equity investment transactions 72 13 59
Securities available for sale gains 25 17 8
Insurance premiums 63 63 -
Other 76 38 38
Total noninterest revenue 798 587 211
NONINTEREST EXPENSES
Salaries 202 194 8
Incentive compensation & employee benefits 235 135 100
Agency & other professional service fees 98 68 30
Communication & data services 47 48 (1)
Occupancy, net 36 38 (2)
Furniture & equipment 41 40 1
Travel & entertainment 24 24 -
Provision for policyholder benefits 78 71 7
Other 64 60 4
Total noninterest expenses 825 678 147
Income before income taxes 216 131 85
Income taxes 65 40 25
NET INCOME $ 151 $ 91 $ 60
NET INCOME APPLICABLE TO COMMON STOCK $ 137 $ 79 $ 58
Cash dividends declared per common share $1.00 $1.00 $-
EARNINGS PER COMMON SHARE:
PRIMARY $1.67 $.98 $.69
FULLY DILUTED $1.66 $.98 $.68
<FN>
Certain prior period amounts have been reclassified to conform to the
current presentation.
</TABLE>
<PAGE> 3
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(in millions, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Increase
SIX MONTHS ENDED JUNE 30, 1996 1995 (Decrease)
<S> <C> <C> <C>
NET INTEREST REVENUE
Interest revenue $3,049 $2,873 $176
Interest expense 2,593 2,469 124
Net interest revenue 456 404 52
Provision for credit losses 5 14 (9)
Net interest revenue after provision
for credit losses 451 390 61
NONINTEREST REVENUE
Trading 393 1 392
Fiduciary & funds management 381 337 44
Corporate finance fees 222 199 23
Other fees & commissions 169 157 12
Net revenue from equity investment transactions 93 39 54
Securities available for sale gains 40 19 21
Insurance premiums 125 112 13
Other 125 65 60
Total noninterest revenue 1,548 929 619
NONINTEREST EXPENSES
Salaries 403 402 1
Incentive compensation & employee benefits 462 268 194
Agency & other professional service fees 158 144 14
Communication & data services 93 95 (2)
Occupancy, net 73 79 (6)
Furniture & equipment 82 82 -
Travel & entertainment 42 47 (5)
Provision for policyholder benefits 150 127 23
Other 123 118 5
Provision for severance-related costs - 50 (50)
Total noninterest expenses 1,586 1,412 174
Income (loss) before income taxes 413 (93) 506
Income taxes (benefit) 124 (27) 151
NET INCOME (LOSS) $ 289 $ (66) $355
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK $ 260 $ (86) $346
Cash dividends declared per common share $2.00 $2.00 $-
EARNINGS (LOSS) PER COMMON SHARE:
PRIMARY $3.19 $(1.10) $4.29
FULLY DILUTED $3.17 $(1.10) $4.27
<FN>
Certain prior period amounts have been reclassified to conform to the
current presentation.
</TABLE>
<PAGE> 4
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
($ in millions, except par value)
<TABLE>
<CAPTION>
June 30, December 31,
1996* 1995
<S> <C> <C>
ASSETS
Cash and due from banks $ 1,663 $ 2,337
Interest-bearing deposits with banks 2,065 2,023
Federal funds sold 365 854
Securities purchased under resale
agreements 25,420 13,206
Securities borrowed 13,373 10,951
Trading assets:
Government securities 14,565 20,704
Corporate debt securities 7,637 5,648
Equity securities 6,869 5,098
Swaps, options and other derivatives 9,486 10,555
Other trading assets 5,218 5,888
Total trading assets 43,775 47,893
Securities available for sale 6,851 6,283
Loans 14,249 12,633
Allowance for credit losses (972) (992)
Accounts receivable and accrued interest 2,841 4,220
Other assets 4,971 4,594
Total $114,601 $104,002
LIABILITIES
Noninterest-bearing deposits
Domestic offices $ 3,327 $ 2,687
Foreign offices 488 605
Interest-bearing deposits
Domestic offices 6,091 5,402
Foreign offices 15,387 17,014
Total deposits 25,293 25,708
Trading liabilities:
Securities sold, not yet purchased
Government securities 10,918 11,092
Equity securities 4,655 3,262
Other trading liabilities 377 473
Swaps, options and other derivatives 10,333 11,264
Total trading liabilities 26,283 26,091
Securities sold under repurchase agreements 24,050 15,247
Other short-term borrowings 15,755 15,761
Accounts payable and accrued expenses 4,531 3,931
Other liabilities 2,563 2,736
Long-term debt 10,709 9,294
Total liabilities 109,184 98,768
PREFERRED STOCK OF SUBSIDIARY 250 250
STOCKHOLDERS' EQUITY
Preferred stock 866 865
Common stock, $1 par value
Authorized, 300,000,000 shares
Issued, 83,678,973 shares 84 84
Capital surplus 1,308 1,302
Retained earnings 3,393 3,316
Common stock in treasury, at cost:
1996, 3,758,059 shares;
1995, 4,602,855 shares (273) (336)
Other stockholders' equity (211) (247)
Total stockholders' equity 5,167 4,984
Total $114,601 $104,002
<FN>
Certain prior period amounts have been reclassified to conform to the
current presentation.
* Unaudited
</TABLE>
<PAGE> 5
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(in millions)
(unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1996 1995
<S> <C> <C>
PREFERRED STOCK
Balance, January 1 $ 865 $ 395
Preferred stock issued 1 468
Balance, June 30 866 863
COMMON STOCK
Balance, January 1 and June 30 84 84
CAPITAL SURPLUS
Balance, January 1 1,302 1,317
Preferred stock issuance and conversion costs - (16)
Common stock distributed under employee
benefit plans 6 (1)
Balance, June 30 1,308 1,300
RETAINED EARNINGS
Balance, January 1 3,316 3,494
Net income (loss) 289 (66)
Cash dividends declared
Preferred stock (29) (18)
Common stock (159) (157)
Treasury stock distributed under employee benefit plans (24) (13)
Balance, June 30 3,393 3,240
COMMON STOCK IN TREASURY, AT COST
Balance, January 1 (336) (416)
Purchases of stock (38) (13)
Restricted stock granted, net 19 4
Treasury stock distributed under employee benefit plans 82 34
Balance, June 30 (273) (391)
COMMON STOCK ISSUABLE - STOCK AWARDS
Balance, January 1 233 160
Deferred stock awards granted, net 63 31
Deferred stock distributed (1) (16)
Balance, June 30 295 175
DEFERRED COMPENSATION - STOCK AWARDS
Balance, January 1 (151) (63)
Deferred stock awards granted, net (62) (22)
Restricted stock granted, net (19) (2)
Amortization of deferred compensation, net 82 19
Balance, June 30 (150) (68)
CUMULATIVE TRANSLATION ADJUSTMENTS
Balance, January 1 (348) (336)
Translation adjustments (27) 13
Income taxes applicable to translation adjustments 18 (24)
Balance, June 30 (357) (347)
SECURITIES VALUATION ALLOWANCE
Balance, January 1 19 69
Change in unrealized net gains, after applicable
income taxes and minority interest (18) (36)
Balance, June 30 1 33
TOTAL STOCKHOLDERS' EQUITY, JUNE 30 $5,167 $4,889
</TABLE>
<PAGE> 6
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
(unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 289 $ (66)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Provision for credit losses 5 14
Provision for severance-related costs - 50
Provision for policyholder benefits 150 127
Deferred income taxes 100 (33)
Depreciation and amortization of premises
and equipment 71 67
Other, net (56) (45)
Earnings adjusted for noncash charges and credits 559 114
Net change in:
Trading assets 3,776 (3,874)
Trading liabilities (248) 7,914
Receivables and payables from securities
transactions 1,287 126
Other operating assets and liabilities, net 410 (759)
Securities available for sale gains (40) (19)
Net cash provided by operating activities 5,744 3,502
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in:
Interest-bearing deposits with banks (79) 1,903
Federal funds sold 489 2,306
Securities purchased under resale agreements (11,972) (8,637)
Securities borrowed (2,422) 289
Loans (1,504) 960
Securities available for sale:
Purchases (2,918) (1,621)
Maturities and other redemptions 1,823 1,687
Sales 260 1,163
Acquisitions of premises and equipment (86) (73)
Other, net 106 (64)
Net cash used in investing activities (16,303) (2,087)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in:
Deposits (517) (2,135)
Securities sold under repurchase agreements 9,024 3,240
Other short-term borrowings (126) (3,990)
Issuances of long-term debt 2,018 2,196
Repayments of long-term debt (363) (1,000)
Issuances of preferred stock - 221
Purchases of treasury stock (38) (13)
Cash dividends paid (188) (174)
Other, net 63 11
Net cash provided by (used in) financing activities 9,873 (1,644)
Net effect of exchange rate changes on cash 12 (17)
NET DECREASE IN CASH AND DUE FROM BANKS (674) (246)
Cash and due from banks, beginning of year 2,337 1,985
Cash and due from banks, end of period $ 1,663 $ 1,739
Interest paid $2,624 $2,310
Income taxes paid, net $133 $182
Noncash investing activities $50 $41
Noncash financing activities:
Conversion of debt to preferred stock $1 $243
<FN>
Certain prior period amounts have been reclassified to conform to the
current presentation.
</TABLE>
<PAGE> 7
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF NET INTEREST REVENUE
(in millions)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
INTEREST REVENUE
Interest-bearing deposits with banks $ 40 $ 60 $ 83 $ 109
Federal funds sold 31 21 59 56
Securities purchased under
resale agreements 275 211 469 358
Securities borrowed 241 198 466 370
Trading assets 517 714 1,289 1,330
Securities available for sale
Taxable 110 81 200 170
Exempt from federal income taxes 5 15 12 31
Loans 240 220 471 449
Total interest revenue 1,459 1,520 3,049 2,873
INTEREST EXPENSE
Deposits
In domestic offices 84 98 172 191
In foreign offices 216 237 463 478
Trading liabilities 135 237 461 450
Securities sold under repurchase agreements 400 310 708 546
Other short-term borrowings 237 307 508 605
Long-term debt 144 109 281 199
Total interest expense 1,216 1,298 2,593 2,469
NET INTEREST REVENUE $ 243 $ 222 $ 456 $ 404
<FN>
Certain prior period amounts have been reclassified to conform to the
current presentation.
</TABLE>
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Bankers Trust New York Corporation (the "Parent Company") and
subsidiaries (collectively, the "Corporation", or the "Firm") earned $151
million for the quarter ended June 30, 1996, or $1.67 primary earnings per
share. In the second quarter of 1995, the Corporation earned $91 million,
or $.98 primary earnings per share.
For the first six months of 1996, the Corporation earned $289 million,
or $3.19 primary earnings per share. The Corporation recorded a loss of
$66 million, or $1.10 primary loss per share in the comparable period of
1995.
ORGANIZATIONAL UNITS RESULTS
Organizational Unit business results are determined based on the
Corporation's internal management accounting process, which allocates
revenue and expenses among the Organizational Units. Because the
Corporation's business is complex in nature and its operations are
integrated, it is impractical to segregate respective contributions of the
Organizational Units with precision. As a result, estimates and subjective
judgments have been made to apportion revenue and expense items. The
internal management accounting process, unlike financial accounting in
accordance with generally accepted accounting principles, is based on the
way the management views Bankers Trust's business and is not necessarily
comparable with similar information disclosed by other financial
institutions. In order to provide comparability from one period to the
next, the Corporation will restate this analysis to conform with material
changes in the allocation process and/or significant changes in
organizational structure.
The following table analyzes net income (loss) by Organizational
Units:
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, Increase June 30, Increase
(in millions) 1996 1995 (Decrease) 1996 1995 (Decrease)
<S> <C> <C> <C> <C> <C> <C>
Investment Banking $109 $ 74 $ 35 $186 $ 98 $ 88
Risk Management Services (22) (9) (13) (21) (39) 18
Trading & Sales 17 8 9 41 19 22
Investment Management 4 2 2 5 (2) 7
Client Processing Services 26 27 (1) 47 47 -
Australia/New Zealand 31 25 6 55 47 8
Asia 7 8 (1) 13 5 8
Latin America 36 (4) 40 55 (112) 167
Corporate/Other (57) (40) (17) (92) (129) 37
Net Income (Loss) $151 $ 91 $ 60 $289 $ (66) $355
</TABLE>
<PAGE> 9
ORGANIZATIONAL UNITS RESULTS (continued)
The Investment Banking business produced net income of $109 million in
the second quarter of 1996, compared with $74 million in the second quarter
of the previous year. The current quarter's results were attributable
primarily to strong revenues from corporate finance activities. In
addition, within the Private Equity Investment unit, one transaction
increased total pre-tax revenues to $30 million above the quarterly average
of the past two years. Net income for the first six months of 1996 was
$186 million compared with $98 million for the comparable period of 1995.
Risk Management Services produced a net loss of $22 million in the
second quarter of 1996, down $13 million from the second quarter of 1995.
The current quarter's results were due to losses incurred in the commodity
derivatives books when copper prices dropped sharply. For the first six
months of 1996 this unit incurred a net loss of $21 million versus a net
loss of $39 million for the same period in 1995.
Net income from the Trading & Sales business, at $17 million, was up
$9 million from the second quarter of 1995. Net income for the first half
of 1996 was $41 million versus $19 million for the comparable period in
1995.
The Corporation's Investment Management business, which for reporting
purposes does not include investment management activities in Australia/NZ,
reported net income of $4 million for the current quarter. The improved
results from the second quarter of 1995 were due primarily to increased
revenue from private banking activities. At June 30, 1996, assets under
management in this organizational unit were approximately $191 billion,
compared to $172 billion at June 30, 1995. Net income for the first six
months of 1996 was $5 million compared to a net loss of $2 million in the
first six months of 1995.
Client Processing Services recorded $26 million of net income in the
second quarter of 1996, down slightly from the second quarter of 1995,
which had been boosted by a $6 million after-tax gain from the sale of the
unit-investment-trust product line. Net income for the first six months of
1996 was $47 million, even with the first six months of 1995.
Net income of the Australia/NZ business was $31 million in the second
quarter of 1996, up $6 million from the second quarter of 1995. The
improvement was due to strong performances in funds management and
corporate finance. At June 30, 1996, assets under management in
Australia/NZ's investment management business were approximately $24
billion, compared to $20 billion at June 30, 1995. Net income for the
first six months of 1996 was $55 million compared to $47 million for the
same period in 1995.
Asia net income was $7 million in the second quarter of 1996, down
slightly from the second quarter of 1995. Net income was $13 million for
the first six months of 1996 compared to $5 million for the first six
months of 1995.
Latin America net income was $36 million in the second quarter of
1996, up $40 million from the second quarter of 1995. Included in the
second quarter's results was $31 million in pre-tax revenue from the sale
<PAGE> 10
ORGANIZATIONAL UNITS RESULTS (continued)
of Compensa, the smaller of the Corporation's two Chilean insurance
subsidiaries. Consorcio, which is now a wholly-owned subsidiary, is the
largest life insurance company in Chile. Net income for the first six
months of 1996 was $55 million compared to a net loss of $112 million in
the comparable period of 1995. The loss incurred in the first-half of 1995
was the result of certain client risk management and trading positions that
were affected by extreme volatility and illiquidity in Latin American
securities markets after the Mexican peso devaluation.
Corporate/Other net loss was $57 million in the second quarter of 1996
compared with a net loss of $40 million in the second quarter of 1995. The
1996 net loss was principally due to $28 million pre-tax of unusual legal
and professional fees related to the completion of the Independent
Counsel's report and the settlement of old leveraged derivative disputes.
For the first six months of 1996 the net loss was $92 million compared with
$129 million for the first six months of 1995.
REVENUE
The table below shows net interest revenue, average balances and
average rates. The tax equivalent adjustment is made to present the
revenue and yields on certain assets, primarily tax-exempt securities and
loans, as if such revenue were taxable.
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
NET INTEREST REVENUE (in millions)
Book basis $243 $222 $456 $404
Tax equivalent adjustment 4 9 8 24
Fully taxable basis $247 $231 $464 $428
AVERAGE BALANCES (in millions)
Interest-earning assets $91,002 $81,393 $88,289 $79,819
Interest-bearing liabilities 86,702 77,674 84,807 76,664
Earning assets financed by
noninterest-bearing funds $ 4,300 $ 3,719 $ 3,482 $ 3,155
AVERAGE RATES (fully taxable basis)
Yield on interest-earning assets 6.47% 7.53% 6.96% 7.32%
Cost of interest-bearing liabilities 5.64 6.70 6.15 6.49
Interest rate spread .83 .83 .81 .83
Contribution of noninterest-bearing
funds .26 .31 .25 .25
Net interest margin 1.09% 1.14% 1.06% 1.08%
</TABLE>
Net interest revenue for the second quarter of 1996 totaled $243
million, up $21 million, or 9 percent, from the second quarter of 1995.
The $21 million increase in net interest revenue was primarily due to a $14
million increase in nontrading-related net interest revenue, which totaled
$179 million for the second quarter of 1996, compared to $165 million for
the comparable 1995 quarter. Nontrading-related net interest revenue is
<PAGE> 11
REVENUE (continued)
considered to be historically a more stable component of overall net
interest revenue. Net interest revenue was $456 for the first six months
of 1996, up $52 million, or 13 percent from the first half of 1995.
Non-trading related net interest revenue totaled $362 million for the first
six months of 1996 versus $346 for the comparable period in 1995.
A significant portion of the Firm's trading and risk management
activities involve positions in interest rate instruments and related
derivatives. The revenue from these activities can periodically shift
between trading and net interest, depending on a variety of factors,
including risk management strategies. Therefore, the Corporation views
trading revenue and trading-related net interest revenue together.
Combined trading revenue and trading-related net interest revenue for
the second quarter of 1996 totaled $210 million, up $74 million from the
second quarter of 1995. Combined trading revenue and trading-related net
interest revenue for the first six months of 1996 was $487 million, up $428
million from the $59 million reported in the first half of 1995.
The table below quantifies the Corporation's trading revenue and
trading-related net interest revenue by major category of market risk.
These categories are based on management's view of the predominant
underlying risk exposure of each of the Firm's trading positions.
<TABLE>
<CAPTION>
Trading-
Related
Net
Trading Interest
(in millions) Revenue Revenue Total
<S> <C> <C> <C>
Quarter ended June 30, 1996
Interest rate risk $ 75 $ 59 $134
Foreign exchange risk 63 - 63
Equity and commodity risk 8 5 13
Total $146 $ 64 $210
Quarter ended June 30, 1995
Interest rate risk $ 10 $ 72 $ 82
Foreign exchange risk 5 - 5
Equity and commodity risk 64 (15) 49
Total $ 79 $ 57 $136
Six Months ended June 30, 1996
Interest rate risk $233 $111 $344
Foreign exchange risk 80 - 80
Equity and commodity risk 80 (17) 63
Total $393 $ 94 $487
Six Months ended June 30, 1995
Interest rate risk $(47) $ 90 $ 43
Foreign exchange risk (38) - (38)
Equity and commodity risk 86 (32) 54
Total $ 1 $ 58 $ 59
</TABLE>
<PAGE> 12
REVENUE (continued)
Second Quarter 1996 vs. Second Quarter 1995
Interest Rate Risk - The increase in revenue was principally due to a
rebound in the Firm's activities in Latin America as 1995 was characterized
by heightened volatility in interest rates coupled with liquidity problems
in the emerging markets of Latin America.
Foreign Exchange Risk - Foreign exchange revenue improved compared to
the same period last year principally due to strong performance in the
Firm's activities in Australia.
Equity and Commodity Risk - Total trading and trading-related net
interest revenue declined compared to the same period last year due to
losses incurred in the commodity derivatives books when copper prices
dropped sharply.
Six Months 1996 vs. Six Months 1995
Interest Rate Risk - The increase in revenue was principally due to a
rebound in the Firm's activities in Latin America as 1995 was characterized
by heightened volatility in interest rates coupled with liquidity problems
in the emerging markets of Latin America.
Foreign Exchange Risk - Trading revenue improved compared to the same
period last year due to increased stability in the foreign exchange markets
and strong performance in the Firm's activities in Australia. The first
half of 1995 was affected by global volatility in foreign exchange markets
during which the dollar fell to record lows against the Japanese yen and
the German mark.
Equity and Commodity Risk - Total trading and trading-related net
interest revenue increased as a result of a rebound in the Firm's equity
related products in the Risk Management Services, Trading & Sales, and
Investment Banking Organizational Units. These results were partially
offset by losses incurred in the commodity derivatives books when copper
prices dropped sharply.
<PAGE> 13
Shown below is a comparison of the components of noninterest revenue
(excluding trading).
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, Increase June 30, Increase
(in millions) 1996 1995 (Decrease) 1996 1995 (Decrease)
<S> <C> <C> <C> <C> <C> <C>
Fiduciary & funds management
revenue $198 $166 $ 32 $ 381 $337 $ 44
Corporate finance fees 136 127 9 222 199 23
Other fees and commissions:
Service charges on deposit
accounts 18 17 1 33 36 (3)
Transaction processing
fees 37 36 1 74 69 5
Other 27 31 (4) 62 52 10
Total other fees &
commissions 82 84 (2) 169 157 12
Net revenue from equity
investment transactions 72 13 59 93 39 54
Securities available for sale
gains 25 17 8 40 19 21
Insurance premiums 63 63 - 125 112 13
Other 76 38 38 125 65 60
Total noninterest revenue
(excluding trading) $652 $508 $144 $1,155 $928 $227
</TABLE>
<PAGE> 14
REVENUE (continued)
Second Quarter 1996 vs. Second Quarter 1995
Fiduciary and funds management revenue totaled $198 million for the
second quarter of 1996, up $32 million, or 19 percent, from the comparable
period last year. Increased revenues were recognized from global fiduciary
services, global private banking activities and corporate trust services.
These increases were due to greater transaction volumes and to a higher
level of assets under management in the United States and Australian
markets.
Corporate finance fees of $136 million increased by $9 million, or 7
percent, from the same period last year, due to higher revenue from
securities underwriting and management fees. Other fees and commissions
totaled $82 million, a decrease of $2 million, or 2 percent, compared with
last year's second quarter.
Net revenue from equity investment transactions was $72 million, up
$59 million from the prior year's second quarter. This increase was
attributable primarily to sales within the Private Equity Investment unit
of Investment Banking.
All other noninterest revenue totaled $164 million, up $46 million
from the prior year's second quarter. Contributing to this increase was
$31 million in pre-tax revenue on the sale of Compensa, the smaller of the
Corporation's two Chilean insurance subsidiaries.
Six Months 1996 vs. Six Months 1995
Fiduciary and funds management fees of $381 million, increased $44
million, or 13 percent, from the first six months of 1995. Increased
revenues were recorded in virtually all activities within this category.
Corporate finance fees totaled $222 million, an increase of $23
million, or 12 percent from the first half of 1995. Higher revenue from
securities underwriting and commercial banking fees were partially offset
by lower revenue from merger and acquisition fees. Other fees and
commissions totaled $169 million, up $12 million, or 8 percent compared to
last year's first six months.
Net revenue from equity investment transactions was $93 million, up
$54 million from the first half of 1995. This increase was attributable
primarily to sales within the Private Equity Investment unit of Investment
Banking.
All other noninterest revenue totaled $290 million, up $94 million
from the first six months of 1995. Contributing to this increase was $31
million in pre-tax revenue on the sale of Compensa, the smaller of the
Corporation's two Chilean insurance subsidiaries, and higher insurance
premium revenue from operations in Chile.
<PAGE> 15
PROVISION AND ALLOWANCE FOR CREDIT LOSSES
The provision for credit losses is dependent upon management's
evaluation as to the amount needed to maintain the allowance for credit
losses at a level considered appropriate in relation to the risk of losses
inherent in the portfolio.
No provision for credit losses was required for the current or prior
year's second quarter. Net charge-offs for the second quarter were $15
million, compared with $2 million a year ago. The current quarter's net
charge-offs included $7 million in charge-offs taken in connection with
settlements of old leveraged derivative transactions.
The provision for credit losses and the other changes in the allowance
for credit losses are shown below (in millions).
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
Allowance for credit losses 1996 1995 1996 1995
<S> <C> <C> <C> <C>
Balance, beginning of period $987 $1,245 $992 $1,252
Net charge-offs
Charge-offs 21 13 49 47
Recoveries 6 11 24 24
Total net charge-offs* 15 2 25 23
Provision for credit losses - - 5 14
Balance, end of period $972 $1,243 $972 $1,243
*Components:
Secured by real estate $ - $(3) $ 1 $ 3
Real estate related - - 4 2
Highly leveraged 3 2 23 22
Other 13 4 1 4
Refinancing country (1) (1) (4) (8)
Total $15 $ 2 $25 $23
</TABLE>
The allowance for credit losses, at $972 million at June 30, 1996, was
down $15 million from its level at March 31, 1996. The allowance was equal
to 170 percent, 138 percent, and 133 percent of total cash basis loans at
June 30, 1996, March 31, 1996, and December 31, 1995, respectively. The
Corporation believes that its allowance must be viewed in its entirety and
therefore is available for potential credit losses in its entire portfolio,
including loans, credit-related commitments, derivatives and other
financial instruments.
In the opinion of management, the allowance, when taken as a whole, is
adequate to absorb reasonably estimated credit losses inherent in the
Corporation's entire portfolio.
<PAGE> 16
PROVISION AND ALLOWANCE FOR CREDIT LOSSES (continued)
The recorded investment in loans that was considered to be impaired
under SFAS 114 was $662 million and $844 million which consisted of total
cash basis loans and renegotiated loans at June 30, 1996 and December 31,
1995, respectively. Included in these amounts were $293 million and $458
million of loans for which the related valuation allowance was $62 million
and $90 million at these dates, respectively.
EXPENSES
Second Quarter 1996 vs. Second Quarter 1995
Total noninterest expenses of $825 million increased by $147 million,
or 22 percent, from the second quarter of 1995. Incentive compensation and
employee benefits expense increased $100 million, primarily due to higher
bonus expense reflecting improved earnings. Salaries expense increased $8
million, or 4 percent, from the second quarter of 1995, mostly due to a 2
percent increase in the average number of employees. All other expenses
totaled $388 million for the quarter, up $39 million, or 11 percent, from
last year's second quarter. The current quarter included $28 million pre-
tax of legal and professional fees related to the completion of the
Independent Counsel's report and the settlement of old leveraged
derivatives transactions.
Six Months 1996 vs. Six Months 1995
Total noninterest expenses of $1.586 billion for the first six months
of 1996 increased by $174 million, or 12 percent from the first half of
1995. Incentive compensation and employee benefits expense increased $194
million, mostly due to higher bonus expense reflecting improved earnings.
Salaries expense increased slightly in the first half of 1996. All other
expenses totaled $721 million for the first six months of 1996, down $21
million, or 3 percent from last year's comparable period. The first half
of 1995 included a $50 million pre-tax provision for severance-related
costs.
INCOME TAXES
Income tax expense for the second quarter of 1996 amounted to $65
million, compared with $40 million for the second quarter of 1995. For the
first six months of 1996, the income tax expense was $124 million compared
with an income tax benefit of $27 million in the first half of 1995. The
effective tax rate was 30 percent for both the quarter and six months ended
June 30, 1996 compared with 31 percent and 29 percent for the quarter and
six months ended June 30, 1995.
<PAGE> 17
EARNINGS PER COMMON SHARE
Primary and fully diluted earnings per common share amounts were
computed by subtracting from earnings the dividend requirements on
preferred stock to arrive at earnings applicable to common stock and
dividing this amount by the average number of common and common equivalent
shares outstanding during the period.
For both primary and fully diluted earnings per share, the average
number of common and common equivalent shares outstanding was the sum of
the average number of shares of common stock outstanding and the
incremental number of shares issuable under outstanding stock options and
deferred stock awards that had a dilutive effect as computed under the
treasury stock method. Under this method, the number of incremental shares
is determined by assuming the issuance of the outstanding stock options and
deferred stock awards reduced by the number of shares assumed to be
repurchased from the issuance proceeds, using the market price of the
Parent Company's common stock. For primary earnings per share, this market
price is the average market price for the period, while for fully diluted
earnings per share, it is the period-end market price if it is higher than
the average market price. At no time during the three month and six month
periods ended June 30, 1996 and 1995 did the Corporation have outstanding
any securities which were convertible into the Parent Company's common
stock.
The earnings applicable to common stock and the number of shares used
for primary and fully diluted earnings per share were as follows (in
millions):
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net income (loss) applicable to
common stock $137 $79 $260 $(86)
Average number of common
shares outstanding 77.832 78.318 77.664 78.332
Average common and common equivalent shares
outstanding - primary (1) 81.900 80.564 81.398 78.332
Average common and common equivalent shares
outstanding assuming full dilution (1) 82.351 80.796 81.956 78.332
<FN>
(1) Common stock equivalents are excluded from the six months ended June
30, 1995 as the effect would be anti-dilutive in calculating earnings
per share.
</TABLE>
<PAGE> 18
BALANCE SHEET ANALYSIS
The following table highlights the changes in the balance sheet.
Since quarter-end balances can be distorted by one-day fluctuations, an
analysis of changes in the quarterly averages is provided to give a better
indication of balance sheet trends.
<TABLE>
<CAPTION>
CONDENSED AVERAGE BALANCE
SHEETS
(in millions)
2nd Qtr 1st Qtr 4th Qtr
1996 1996 1995
<S> <C> <C> <C>
ASSETS
Interest-earning
Interest-bearing deposits with banks $ 2,114 $ 2,167 $ 3,624
Federal funds sold 2,318 1,992 2,387
Securities purchased under resale
agreements 21,636 15,798 15,167
Securities borrowed 15,820 16,194 13,817
Trading assets 29,376 30,393 31,926
Securities available for sale
Taxable 5,480 5,303 5,206
Exempt from federal income taxes 1,201 1,335 1,365
Total securities available for sale 6,681 6,638 6,571
Loans
In domestic offices 7,106 7,000 7,199
In foreign offices 5,951 5,394 5,624
Total loans 13,057 12,394 12,823
Total interest-earning assets 91,002 85,576 86,315
Noninterest-earning
Cash and due from banks 1,210 1,478 1,972
Noninterest-earning trading assets 17,425 16,948 17,858
All other assets 9,104 10,667 9,736
Allowance for credit losses (989) (998) (1,028)
Total $117,752 $113,671 $114,853
LIABILITIES
Interest-bearing
Interest-bearing deposits
In domestic offices $ 6,039 $ 5,928 $ 5,788
In foreign offices 15,861 15,996 18,404
Total interest-bearing deposits 21,900 21,924 24,192
Trading liabilities 12,178 11,939 12,599
Securities sold under repurchase agreements 28,554 23,922 22,680
Other short-term borrowings 13,677 15,449 15,960
Long-term debt 10,393 9,678 8,904
Total interest-bearing liabilities 86,702 82,912 84,335
Noninterest-bearing
Noninterest-bearing deposits 3,034 3,347 3,606
Noninterest-bearing trading liabilities 15,118 15,355 15,392
All other liabilities 7,526 6,779 6,240
Total liabilities 112,380 108,393 109,573
PREFERRED STOCK OF SUBSIDIARY 250 250 250
STOCKHOLDERS' EQUITY
Preferred stock 866 866 865
Common stockholders' equity 4,256 4,162 4,165
Total stockholders' equity 5,122 5,028 5,030
Total $117,752 $113,671 $114,853
<FN>
The condensed average balance sheets are presented on a slightly different
basis than the balance sheets presented in the financial statements section
of this report, in that the various categories of interest-earning assets
and interest-bearing liabilities exclude certain noninterest-
earning/bearing components included in the balance sheet captions. These
components, excluding noninterest-earning/bearing trading
assets/liabilities, are included in "all other assets" and "all other
liabilities" in the condensed average balance sheets.
Certain prior period amounts have been reclassified to conform to the
current presentation.
</TABLE>
<PAGE> 19
BALANCE SHEET ANALYSIS (continued)
Second Quarter 1996 vs. First Quarter 1996
The Corporation's average total assets amounted to $117.8 billion for
the second quarter of 1996, an increase of $4.1 billion, or 4 percent, from
the first quarter of 1996. Average interest-earning assets increased $5.4
billion, or 6 percent, and the proportion of interest-earning assets to
total assets increased from 75 percent to 77 percent. The increase in
interest-earning assets was primarily due to an increase in securities
purchased under resale agreements (up $5.8 billion, or 37 percent), offset
in part by a decrease in trading assets (down $1.0 billion, or 3 percent).
Interest-earning trading assets, as a percentage of total assets, decreased
from 27 percent to 25 percent. Noninterest-earning trading assets
increased $477 million or 3 percent from the first quarter of 1996.
Average total liabilities increased $4.0 billion, or 4 percent from
the first quarter of 1996. Within interest-bearing liabilities an increase
in securities sold under repurchase agreements (up $4.6 billion, or 19
percent) was offset in part by a decrease in other short-term borrowings
(down $1.8 billion, or 11 percent). Total short-term borrowings
(securities sold under repurchase agreements and other short-term
borrowings) as a percentage of total interest-bearing liabilities increased
from 47 percent to 49 percent.
Second Quarter 1996 vs. Fourth Quarter 1995
The Corporation's average total assets for the second quarter of 1996
increased $2.9 billion, or 3 percent, from the fourth quarter of 1995.
Average interest-earning assets increased $4.7 billion, or 5 percent, and
the proportion of interest-earning assets to total assets increased from 75
percent to 77 percent. The increase in interest-earning assets was
primarily due to increases in securities purchased under resale agreements
(up $6.5 billion, or 43 percent) and securities borrowed (up $2.0 billion,
or 14 percent) offset in part by decreases in trading assets (down $2.6
billion, or 8 percent) and interest-bearing deposits with banks (down $1.5
billion, or 42 percent). Interest-earning trading assets, as a percentage
of total assets decreased from 28 percent to 25 percent. Noninterest-
earning trading assets decreased $433 million or 2 percent from the fourth
quarter of 1995.
Average total liabilities increased $2.8 billion, or 3 percent from
the fourth quarter of 1995. Within interest-bearing liabilities, increases
in securities sold under repurchase agreements (up $5.9 billion, or 26
percent) and long-term debt (up $1.5 billion, or 17 percent) were offset in
part by decreases in total interest-bearing deposits (down $2.3 billion, or
9 percent) and other short-term borrowings (down $2.3 billion, or 14
percent). Total short-term borrowings (securities sold under repurchase
agreements and other short-term borrowings) as a percentage of total
interest-bearing liabilities increased from 46 percent to 49 percent.
<PAGE> 20
BALANCE SHEET ANALYSIS (continued)
Securities Available for Sale
The fair value, amortized cost and gross unrealized holding gains and
losses for the Corporation's securities available for sale follow (in
millions):
<TABLE>
<CAPTION>
June 30, March 31, December 31,
1996 1996 1995
<S> <C> <C> <C>
Fair value $6,851 $6,880 $6,283
Amortized cost 6,818 6,821 6,204
Excess of fair value over
amortized cost * $ 33 $ 59 $ 79
* Components:
Unrealized gains $113 $154 $ 182
Unrealized losses (80) (95) (103)
$ 33 $ 59 $ 79
</TABLE>
Long-term Debt
During the second quarter of 1996, the Corporation obtained $968
million of cash proceeds from the issuances of long-term debt and repaid
$176 million of long-term debt. The larger of these debt issuances were as
follows (in millions):
<TABLE>
<CAPTION>
Face Amount
<S> <C>
Parent Company
7 3/8% Subordinated Notes due 2008 $150
Bankers Trust Company
5.94% Senior Notes due 2001 $310
Redeemable Preference Securities
due August 2002 (1) $233
BT Securities Corporation
Floating Rate Notes due 1999 $150
<FN>
(1) At June 30, 1996 certain subsidiaries of Bankers Trust Company had
outstanding ($3.0 billion) of mandatorily redeemable preference securities
with maturities ranging from September 1996 to October 2002.
</TABLE>
<PAGE> 21
TRADING DERIVATIVES
The Corporation actively manages, in accordance with the Corporation's
risk management policies, trading positions in a variety of derivative
books. Many of the Corporation's trading positions are established as a
result of providing derivative products to meet customers' demands. To
anticipate customer demand for such transactions, the Corporation also
carries an inventory of capital market instruments and maintains its access
to market liquidity by quoting bid and offer prices to, and trading with,
other market makers. These two activities are essential to provide
customers with capital market products at competitive prices. All trading
positions are reported at fair value and changes in fair values are
reflected in trading revenue as they occur.
The following tables reflect the gross fair values and balance sheet
amounts of trading derivative financial instruments:
<TABLE>
<CAPTION>
At June 30, Average During
1996 2nd Qtr. 1996
(Liabi- (Liabi-
(in millions) Assets lities) Assets lities)
<S> <C> <C> <C> <C>
OTC Financial Instruments
Interest Rate and Currency
Swap Contracts $ 13,052 $(11,937) $14,254 $(13,607)
Interest Rate Contracts
Forwards 44 (43) 66 (61)
Options purchased 1,015 1,020
Options written (1,261) (1,277)
Foreign Exchange Rate Contracts
Spot and Forwards 7,295 (8,814) 7,315 (8,674)
Options purchased 850 931
Options written (908) (910)
Equity-related contracts 1,907 (2,112) 2,064 (2,330)
Commodity-related and other contracts 720 (750) 550 (540)
Exchange-Traded Options
Interest Rate 12 (8) 26 (5)
Equity 157 (66) 165 (71)
Total Gross Fair Values 25,052 (25,899) 26,391 (27,475)
Impact of Netting Agreements (15,566) 15,566 (16,258) 16,258
$ 9,486(1) $10,133
$(10,333)(1) $(11,217)
<FN>
(1) As reflected on the balance sheet in "Trading Assets" and "Trading
Liabilities."
</TABLE>
<PAGE> 22
TRADING DERIVATIVES (continued)
<TABLE>
<CAPTION>
At December 31, Average During
1995 4th Qtr. 1995
(Liabi- (Liabi-
(in millions) Assets lities) Assets lities)
<S> <C> <C> <C> <C>
OTC Financial Instruments
Interest Rate and Currency
Swap Contracts $ 15,858 $(15,471) $ 16,260 $(14,960)
Interest Rate Contracts
Forwards 83 (81) 127 (104)
Options purchased 1,426 1,299
Options written (1,312) (1,729)
Foreign Exchange Rate Contracts
Spot and Forwards 7,931 (8,937) 9,473 (10,236)
Options purchased 999 1,213
Options written (941) (1,148)
Equity-related contracts 2,011 (2,359) 1,838 (2,093)
Commodity-related and other contracts 541 (531) 542 (468)
Exchange-Traded Options
Interest Rate 33 (16) 32 (39)
Equity 137 (80) 158 (105)
Total Gross Fair Values 29,019 (29,728) 30,942 (30,882)
Impact of Netting Agreements (18,464) 18,464 (19,152) 19,152
$ 10,555(1) $ 11,790
$(11,264)(1) $(11,730)
<FN>
(1) As reflected on the balance sheet in "Trading Assets" and "Trading
Liabilities."
</TABLE>
END-USER DERIVATIVES
The Corporation, as an end user, utilizes various types of derivative
products (principally interest rate swaps) to manage the interest rate,
currency and other market risks associated with certain liabilities and
assets such as interest-bearing deposits, short-term borrowings and long-
term debt as well as investments in non-marketable equity instruments and
net investments in foreign entities. Revenue or expense pertaining to
management of interest rate exposure is predominantly recognized over the
life of the contract as an adjustment to interest revenue or expense.
Total net end-user derivative unrealized gains were $71 million, and
$212 million at June 30, 1996 and December 31, 1995, respectively. The
$141 million decrease during the second half of 1996 was primarily due to
increases in long-term interest rates.
<PAGE> 23
END-USER DERIVATIVES (continued)
The following tables provide the gross unrealized gains and losses for
end-user derivatives. Gross unrealized gains and losses for hedges of
securities available for sale are recognized in the financial statements
with the offset as an adjustment to securities valuation allowance in
stockholders' equity. Gross unrealized gains and losses for hedges of
loans, other assets, interest-bearing deposits, other short-term
borrowings, long-term debt, and net investments in foreign subsidiaries are
not yet recognized in the financial statements.
<TABLE>
<CAPTION>
Other Net invest-
short- ments in
Securities Interest- term Long- foreign
(in millions) available Other bearing borrow- term subsi-
June 30, 1996 for sale Loans assets deposits ings debt diaries Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Rate Swaps
Pay Variable
Unrealized Gain $ - $16 $- $ 39 $ 1 $177 $- $ 233
Unrealized (Loss) - - - (41) (10) (86) - (137)
Pay Variable Net - 16 - (2) (9) 91 - 96
Pay Fixed
Unrealized Gain 7 - - 16 - 48 - 71
Unrealized (Loss) (46) (2) - (52) - (2) - (102)
Pay Fixed Net (39) (2) - (36) - 46 - (31)
Total Unrealized
Gain 7 16 - 55 1 225 - 304
Total Unrealized
(Loss) (46) (2) - (93) (10) (88) - (239)
Total Net $(39) $14 $- $(38) $ (9) $137 $- $ 65
Forward Rate Agreements
Unrealized Gain $- $- $- $- $- $- $- $-
Unrealized (Loss) - - - - - - - -
Net $- $- $- $- $- $- $- $-
Currency Swaps and Forwards
Unrealized Gain $ - $- $ 1 $ 18 $ - $ 48 $ 28 $ 95
Unrealized (Loss) (1) - - (2) (3) (44) (32) (82)
Net $(1) $- $ 1 $ 16 $(3) $ 4 $ (4) $ 13
Other Contracts (1)
Unrealized Gain $ - $- $ - $- $- $- $- $ -
Unrealized (Loss) (4) - (3) - - - - (7)
Net $(4) $- $(3) $- $- $- $- $(7)
Total Unrealized
Gain $ 7 $16 $ 1 $ 73 $ 1 $ 273 $ 28 $ 399
Total Unrealized
(Loss) (51) (2) (3) (95) (13) (132) (32) (328)
Total Net $(44) $14 $(2) $(22) $(12)$ 141 $ (4)$ 71
<FN>
(1) Other contracts are principally equity swaps and collars.
</TABLE>
<PAGE> 24
END-USER DERIVATIVES (continued)
<TABLE>
<CAPTION>
Other Net invest-
short- ments in
Securities Interest- term Long- foreign
(in millions) available Other bearing borrow- term subsi-
December 31, 1995 for sale Loans assets deposits ings debt iaries Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Rate Swaps
Pay Variable
Unrealized Gain $ - $ - $- $132 $ 4 $339 $- $ 475
Unrealized (Loss) - (5) - (7) (1) (24) - (37)
Pay Variable Net - (5) - 125 3 315 - 438
Pay Fixed
Unrealized Gain - - - 11 - 14 - 25
Unrealized (Loss (88) - - (82) (1) (21) - (192)
Pay Fixed Net (88) - - (71) (1) (7) - (167)
Total Unrealized
Gain - - - 143 4 353 - 500
Total Unrealized
(Loss) (88) (5) - (89) (2) (45) - (229)
Total Net $(88) $(5) $- $ 54 $ 2 $308 $- $ 271
Forward Rate Agreements
Unrealized Gain $- $- $- $ 1 $- $- $- $ 1
Unrealized (Loss) - - - (1) - - - (1)
Net $- $- $- $ - $- $- $- $ -
Currency Swaps and Forwards
Unrealized Gain $- $- $1 $ 17 $ - $ 20 $ 14 $ 52
Unrealized (Loss) - - - (12) (1) (48) (30) (91)
Net $- $- $1 $ 5 $(1) $(28) $(16) $(39)
Other Contracts (1)
Unrealized Gain $ - $- $ 1 $- $- $- $- $ 1
Unrealized (Loss) (5) - (16) - - - - (21)
Net $(5) $- $(15) $- $- $- $- $(20)
Total Unrealized
Gain $ - $- $ 2 $ 161 $ 4 $373 $ 14 $ 554
Total Unrealized
(Loss) (93) (5) (16) (102) (3) (93) (30) (342)
Total Net $(93) $(5) $(14) $ 59 $ 1 $280 $(16)$ 212
<FN>
(1) Other contracts are principally equity swaps and collars.
</TABLE>
<PAGE> 25
END-USER DERIVATIVES (continued)
For paying variable and paying fixed interest rate swaps entered into
as an end user, the weighted average receive rate and weighted average pay
rate (interest rates were based on the weighted averages of both U.S. and
non- U.S. currencies) by maturity and corresponding notional amounts were
as follows ($ in millions):
<TABLE>
<CAPTION>
At June 30, 1996
Notional
Amount Paying Variable Paying Fixed
Maturing Notional Receive Pay Notional Receive Pay Total
In: Amount Rate Rate Amount Rate Rate Notional
<S> <C> <C> <C> <C> <C> <C> <C>
1996 $19,489 5.62% 5.49% $ 5,865 5.95% 5.92% $25,354
1997-1998 15,970 5.73 5.58 4,350 5.22 5.92 20,320
1999-2000 3,812 6.45 6.04 1,313 3.62 4.94 5,125
2001 and
thereafter 5,012 6.63 5.58 820 5.56 7.31 5,832
Total $44,283 $12,348 $56,631
<FN>
All rates were those in effect at June 30, 1996. Variable rates are
primarily based on LIBOR and may change significantly, affecting future
cash flows.
</TABLE>
<TABLE>
<CAPTION>
At December 31, 1995
Notional
Amount Paying Variable Paying Fixed
Maturing Notional Receive Pay Notional Receive Pay Total
In: Amount Rate Rate Amount Rate Rate Notional
<S> <C> <C> <C> <C> <C> <C> <C>
1996 $30,770 5.97% 5.87% $ 8,742 6.00% 6.21% $39,512
1997-1998 6,558 5.99 5.84 3,657 5.33 5.76 10,215
1999-2000 3,448 6.57 6.34 1,373 3.86 4.99 4,821
2001 and
thereafter 3,927 6.64 5.93 629 5.91 7.34 4,556
Total $44,703 $14,401 $59,104
<FN>
All rates were those in effect at December 31, 1995. Variable rates are
primarily based on LIBOR and may change significantly, affecting future
cash flows.
</TABLE>
<PAGE> 26
REGULATORY CAPITAL
The Federal Reserve Board's ("FRB") capital adequacy guidelines
mandate that minimum capital ratios be maintained by bank holding companies
and their bank subsidiaries. In addition, the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA") mandated the establishment
of capital tiers for banks based on these ratios. The Corporation's 1995
Annual Report on Form 10-K, on page 42, provides a detailed discussion of
these guidelines and regulations.
Based on their respective regulatory capital ratios as of June 30,
1996, both Bankers Trust Company ("BTCo") and Bankers Trust (Delaware) are
well capitalized, as defined in the regulations issued by the FRB and the
other federal bank regulatory agencies setting forth the general capital
requirements mandated by FDICIA.
The table below presents the regulatory capital ratios of Bankers
Trust New York Corporation and BTCo at June 30, 1996 and December 31, 1995,
along with the FRB's minimum regulatory guidelines. All of these
regulatory capital ratios exclude any impact of the securities valuation
allowance which is determined in accordance with SFAS 115.
<TABLE>
<CAPTION>
FRB
Minimum
June 30, December 31, Regulatory
1996 1995 Guidelines
<S> <C> <C> <C>
CORPORATION
Risk-Based Ratios
Tier 1 Capital 8.3% 8.5% 4.0%
Total Capital 13.5% 13.9% 8.0%
Leverage Ratio 5.5% 5.1% 3.0%
BTCo
Risk-Based Ratios
Tier 1 Capital 9.3% 9.5% 4.0%
Total Capital 12.4% 12.8% 8.0%
Leverage Ratio 5.5% 5.1% 3.0%
</TABLE>
The following were the essential components of the Corporation's and
BTCo's risk-based capital ratios (in millions):
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
<S> <C> <C>
Corporation
Tier 1 Capital $4,614 $4,512
Tier 2 Capital 2,948 2,858
Total Capital $7,562 $7,370
Total risk-weighted assets $55,900 $53,021
</TABLE>
<PAGE> 27
REGULATORY CAPITAL (continued)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
<S> <C> <C>
BTCo
Tier 1 Capital $4,617 $4,394
Tier 2 Capital 1,552 1,532
Total Capital $6,169 $5,926
Total risk-weighted assets $49,619 $46,389
</TABLE>
Comparing June 30, 1996 to December 31, 1995, the Corporation's Tier 1
Capital and Total Capital ratios declined by 20 basis points and 40 basis
points, respectively, as a result of the increase in total risk-weighted
assets. The Corporation's total risk-weighted assets at June 30, 1996 were
$2.879 billion higher than at year-end 1995. The Leverage Ratio increased
by 40 basis points at June 30, 1996 primarily as a result of a decrease in
average total assets during the second quarter of 1996 compared to the
fourth quarter of 1995. These factors were also the causes for the
variances in BTCo's Capital and Leverage ratios.
LIQUIDITY
Liquidity is the ability to have the funds available at all times to
meet the commitments of the Corporation. The Corporation has a formal
process for managing liquidity on a global basis for the Firm as a whole as
well as for each of its significant subsidiaries. Management's guiding
policy is to maintain conservative levels of liquidity designed to ensure
that the Firm has the ability to meet its obligations under all conceivable
circumstances. Management maintains a dual focus to ensure a conservative
liquidity position by promoting asset liquidity and actively managing
liability/capital levels, maturities and diversification. The fundamental
objective in this regard is to ensure that, even in the event of a complete
loss of access to the liability markets, the Corporation will be able to
continue to fund those assets that cannot be liquidated in a timely manner.
Most of the Corporation's assets are highly liquid and of high credit
quality. The Corporation maintains excess liquidity through its base of
liquid assets. Liquid assets consist of cash and due from banks, interest-
bearing deposits with banks, federal funds sold, securities purchased under
resale agreements, securities borrowed, trading assets, and securities
available for sale. Securities purchased under resale agreements and
securities borrowed are virtually all short-term in nature and are
collateralized with U.S. government or other marketable securities, or cash
equivalents. Trading assets are marked to market daily and primarily
consist of U.S. government and agency securities, state and municipal
securities, foreign government obligations, and money market instruments.
The Corporation's liquid assets amounted to $93.5 billion and $87.0 billion
as of June 30, and March 31, 1996, and $83.5 billion as of December 31,
1995, which equaled 81 percent, 80 percent, and 80 percent of gross total
assets at those dates respectively.
<PAGE> 28
LIQUIDITY (continued)
Cash Flows
The following comments apply to the consolidated statement of cash
flows, which appears on page 6.
Cash and due from banks decreased $674 million during the first six months
of 1996, as the net cash used in investing activities exceeded the sum of
the net cash provided by financing and operating activities. The $16.3
billion of net cash used in investing activities was largely the result of
cash outflows from net changes in securities purchased under resale
agreements ($12.0 billion), purchases of securities available for sale
($2.9 billion) and net changes in securities borrowed ($2.4 billion)
partially offset by cash inflows from maturities and other redemptions of
securities available for sale ($1.8 billion). The $9.9 billion of net cash
provided by financing activities was primarily the result of an increase in
the net change in securities sold under repurchase agreements ($9.0
billion) and from issuances of long-term debt ($2.0 billion), offset in
part by a decrease in the net change in deposits ($517 million) and
repayments of long-term debt ($363 million). The increase in net cash
provided by operating activities was mostly due to an increase in net
changes in trading assets ($3.8 billion) and net changes in receivables and
payables from securities transactions ($1.3 billion).
Cash and due from banks decreased $246 million during the first six
months of 1995, as the sum of net cash used in investing and financing
activities exceeded the net cash provided by operating activities. Within
the investing activities category, cash outflows from net changes in
securities purchased under resale agreements ($8.6 billion) was offset in
part by cash inflows from sales, maturities and other redemptions of
securities available for sale ($2.9 billion) as well as net changes in
federal funds sold ($2.3 billion). The $1.6 billion of net cash used in
financing activities was largely the result of cash outflows from the net
changes in other short-term borrowings ($4.0 billion) and deposits ($2.1
billion) as well as from repayments of long-term debt ($1.0 billion) offset
in part by the cash inflows from the net change in securities sold under
repurchase agreements ($3.2 billion) and issuances of long-term debt ($2.2
billion). The $3.5 billion of net cash provided by operating activities
primarily resulted from a $4.0 billion net change in trading assets and
liabilities.
Interest Rate Sensitivity
Condensed interest rate sensitivity data for the Corporation at June
30, 1996 is presented in the table below. For purposes of this
presentation, the interest-earning/bearing components of trading assets and
trading liabilities are assumed to reprice within three months.
The interest rate gaps reported in the table arise when assets are
funded with liabilities having different repricing intervals, after
considering the effect of off-balance sheet hedging instruments. Since
these gaps are actively managed and change daily as adjustments are made in
<PAGE> 29
LIQUIDITY (continued)
interest rate views and market outlook, positions at the end of any period
may not be reflective of the Corporation's interest rate view in subsequent
periods. Active management dictates that longer-term economic views are
balanced against prospects of short-term interest rate changes in all
repricing intervals.
<TABLE>
<CAPTION>
By Repricing Interval Non-
interest-
Within 1 - 5 After bearing
(in billions) June 30, 1996 1 year years 5 years funds Total
<S> <C> <C> <C> <C> <C>
Assets $ 83.8 $ 2.2 $ 3.6 $ 25.0 $ 114.6
Liabilities, preferred stock
of subsidiary and preferred
stock (76.4) (4.4) (3.6) (25.9) (110.3)
Common stockholders' equity - - - (4.3) (4.3)
Effect of off-balance sheet
hedging instruments (6.5) 3.7 2.8 - -
Interest rate sensitivity gap $ 0.9 $ 1.5 $ 2.8 $ (5.2) $ -
</TABLE>
<PAGE> 30
NONPERFORMING ASSETS
The components of cash basis loans, renegotiated loans, other real
estate and other nonperforming assets are shown below ($ in millions).
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
<S> <C> <C>
CASH BASIS LOANS
Domestic
Commercial and industrial $169 $263
Secured by real estate 250 297
Financial institutions 10 10
Total domestic 429 570
International
Commercial and industrial 80 106
Secured by real estate 58 65
Financial institutions 4 3
Lease financing 2 -
Total international 144 174
Total cash basis loans $573 $744
Ratio of cash basis loans to total loans 4.0% 5.9%
Ratio of allowance for credit losses to cash
basis loans 170% 133%
RENEGOTIATED LOANS
Secured by real estate $89 $ 88
Other - 12
Total renegotiated loans $89 $100
OTHER REAL ESTATE $219 $259
OTHER NONPERFORMING ASSETS
Assets acquired in credit workouts $67 $66
Other 1 1
Total other nonperforming assets $68 $67
Loans 90 days or more past due and still
accruing interest $2 $26
</TABLE>
<PAGE> 31
NONPERFORMING ASSETS (continued)
An analysis of the changes in the Corporation's total cash basis loans
during the first six months of 1996 follows (in millions).
<TABLE>
<CAPTION>
<S> <C>
Balance, December 31, 1995 $ 744
Net transfers to cash basis loans 8
Net paydowns (123)
Charge-offs (49)
Transfers to other real estate (5)
Other (2)
Balance, June 30, 1996 $573
</TABLE>
The Corporation's total cash basis loans amounted to $573 million at
June 30, 1996, down $171 million, or 23 percent, from December 31, 1995.
This decline is attributable to collections and charge-offs in
connection with the settlement of old derivative transactions ($60 million)
as well as decreases in loans secured by real estate ($54 million) and
various commercial and industrial loans ($61 million). Also within cash
basis loans, loans secured by real estate were $308 million and $362
million at June 30, 1996 and December 31, 1995, respectively. Commercial
and industrial loans to highly leveraged borrowers were $128 million and
$153 million at June 30, 1996 and December 31, 1995, respectively. Within
cash basis loans, leveraged derivative contracts were $61 million and $104
million at June 30, 1996 and December 31, 1995, respectively. Based on an
analysis of the potential outcome of the remaining outstanding issues
relating to leveraged derivative transactions, management continues to
believe that the expected financial impact should be covered by existing
reserves.
The following table sets forth the approximate effect on interest
revenue of cash basis loans and renegotiated loans. This disclosure
reflects the interest on loans which were carried on the balance sheet and
classified as either cash basis or renegotiated at June 30 of each year.
The rates used in determining the gross amount of interest that would have
been recorded at the original rate were not necessarily representative of
current market rates.
<PAGE> 32
NONPERFORMING ASSETS (continued)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
(in millions) 1996 1995
<S> <C> <C>
Domestic Loans
Gross amount of interest that would have
been recorded at original rate $24 $32
Less, interest, net of reversals, recognized
in interest revenue 4 4
Reduction of interest revenue 20 28
International Loans
Gross amount of interest that would have
been recorded at original rate 6 10
Less, interest, net of reversals, recognized
in interest revenue - -
Reduction of interest revenue 6 10
Total reduction of interest revenue $26 $38
</TABLE>
HIGHLY LEVERAGED TRANSACTIONS
Amounts included in the table and discussion which follow are
generally based on the definition that the Corporation uses in order to
monitor the extent of its exposure to highly leveraged transactions
("HLTs"). The Corporation's 1995 Annual Report on Form 10-K, on page 57,
provides a detailed discussion of the definition.
<TABLE>
<CAPTION>
Highly Leveraged Transactions
June 30, December 31,
(in millions) 1996 1995
<S> <C> <C>
Loans
Senior debt $1,169 $1,105
Subordinated debt 72 68
Total loans $1,241 $1,173
Unfunded commitments
Commitments to lend $574 $539
Letters of credit 229 263
Total unfunded commitments $803 $802
Equity investments $613 $648
Commitments to invest $280 $289
</TABLE>
<PAGE> 33
HIGHLY LEVERAGED TRANSACTIONS (continued)
The Corporation's outstanding loans were to 110 separate borrowers in
39 separate industry groups at June 30, 1996, compared to 97 separate
borrowers in 38 separate industry groups at December 31, 1995. The retail
food group at 12 percent was the only industry concentration which exceeded
10 percent of total HLT loans outstanding at June 30, 1996.
In addition to the amounts shown in the table above, at June 30, 1996,
the Corporation had issued commitment letters which had been accepted,
subject to documentation and certain other conditions, of $1.68 billion
(which were in various stages of syndication) and had additional HLTs in
various stages of discussion and negotiation.
During the first half of 1996, the Corporation originated $2.3 billion
of HLT commitments. It should be noted that the Corporation's loans and
commitments in connection with HLTs fluctuate as new loans and commitments
are made and as loans and commitments are syndicated, participated or paid.
All loans and commitments to finance HLTs are reviewed and approved by
senior credit officers of the Corporation. In addition to a strict
transactional and credit approval process, the portfolio of leveraged loans
and commitments is actively monitored and managed to minimize risk through
diversification among borrowers and industries. As part of this strategy,
sell and hold targets are regularly updated in connection with market
opportunities and the addition of new HLTs. Retention by the Corporation
after syndication and sales of loan participations has typically been less
than $50 million, and the average outstanding for the portfolio at June 30,
1996 was less than $12 million. However, at June 30, 1996, the Corporation
had total exposure (loans outstanding plus unfunded commitments) in excess
of $50 million to 7 separate highly leveraged borrowers.
At June 30, 1996, $128 million of the HLT loan portfolio was on a cash
basis. In addition, $6 million of the equity investments in HLT companies
represented assets acquired in credit workouts, which are reported as other
nonperforming assets. Net charge-offs of $23 million of HLT loans were
recorded in the first half of 1996. In addition, the Corporation recorded
a net gain of $75 million in connection with the sales and/or write-offs of
its equity investments in highly leveraged companies during the first half
of 1996.
Generally, fees (typically 2 to 4 percent of the principal amount
committed) and interest charged (typically LIBOR plus 1.5 to 3 percent) on
HLT loans are higher than on other credits. The Corporation does not
account for revenue or expenses from HLTs separately from its other
corporate lending activities. However, it is estimated that transaction
fees recognized for lending activities relating to HLTs were approximately
$61 million during the first half of 1996 and that as of June 30, 1996,
approximately $19 million of fees were deferred and will be recognized as
future revenue.
<PAGE> 34
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(4) Instruments Defining the Rights of Security Holders,
Including Indentures
(v) - The Corporation hereby agrees to furnish to the
Commission, upon request, a copy of any instru-
ments defining the rights of holders of long-term
debt issued by Bankers Trust New York Corporation
or its subsidiaries.
(10) Material Contracts
iii(A) Management Contracts and Compensation Plans
(12) Statement re Computation of Ratios
(27) Financial Data Schedule
(b) Reports on Form 8-K - Bankers Trust New York Corporation filed
five reports on Form 8-K during the quarter ended June 30, 1996.
- The report dated April 15, 1996 filed the Corporation's Press
Release dated April 15, 1996, which announced the expected
election of Frank N. Newman to the position of Chairman of the
Board of Bankers Trust New York Corporation and Bankers Trust
Company, and filed the Corporation's Press Release dated
April 16, 1996, which announced earnings for the quarter ended
March 31, 1996. The report also filed certain additional
financial information relating to an historical analysis of net
income by Organizational Unit for the years ending December 31, 1992
through 1995.
- The report dated April 25, 1996 filed an underwriting agreement
covering the issuance and sale by Bankers Trust New York
Corporation of 7 3/8% Subordinated Notes due 2008 and various
other exhibits related to the issuance.
- The report dated May 3, 1996 filed the announcement dated
May 3, 1996 that Equitable of Iowa Companies would acquire
Golden American Life Insurance Company, an indirect wholly-owned
subsidiary of Bankers Trust New York Corporation.
- The report dated May 22, 1996 filed the Corporation's Press
Release dated May 22, 1996 which announced that Wolfensohn &
Co., Inc. will merge with Bankers Trust.
- The report dated June 18, 1996 filed the Corporation's Press
Release dated June 18, 1996 which announced that Donald L.
Staheli, chairman of the board and chief executive officer of
Continental Grain Company, had been elected a director of both
Bankers Trust New York Corporation and Bankers Trust Company.
<PAGE> 35
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, on August 14, 1996.
BANKERS TRUST NEW YORK CORPORATION
BY: GEOFFREY M. FLETCHER
Geoffrey M. Fletcher
Senior Vice President and
Principal Accounting Officer
<PAGE> 36
<PAGE> 37
<PAGE> 38
BANKERS TRUST NEW YORK CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1996
EXHIBIT INDEX
(4) Instruments Defining the Rights of Security
Holders, Including Indentures
(v) - Long-Term Debt Indentures (a)
(10) Material Contracts
iii (a) Management Contracts and Compensation Plans
(1) Severance Agreement with Timothy T. Yates
(2) Severance Agreement with Charles S. Sanford, Jr.
(3) BT Investments (Australia) Limited Group Notional
Equity Participation Plan
(12) Statement re Computation of Ratios
(a) - Computation of Consolidated Ratios of
Earnings to Fixed Charges
(b) - Computation of Consolidated Ratios of
Earnings to Combined Fixed Charges and
Preferred Stock Dividend Requirements
(27) Financial Data Schedule
[FN]
(a) The Corporation hereby agrees to furnish to the Commission, upon
request, a copy of any instruments defining the rights of holders of long-
term debt issued by Bankers Trust New York Corporation or its
subsidiaries.
<PAGE>
<PAGE>
EXHIBIT 10(iii)(A)(1)
SETTLEMENT AND NON-DISCLOSURE AGREEMENT
TIMOTHY T. YATES, on his own behalf and on behalf of his
heirs, executors, administrators, attorneys, successors and
assigns (hereinafter collectively referred to as "Yates"), and
BANKERS TRUST NEW YORK CORPORATION, on its own behalf and on
behalf of its subsidiaries, divisions, affiliates, successors and
assigns, and its and their respective officers, directors,
agents, representatives and employees (hereinafter collectively
referred to as "Bankers Trust" or the "Company"), have reached
the within agreement ("Agreement") in settlement of any and all
issues related to Yates' employment with, and separation from the
employ of, Bankers Trust, such Agreement being reached on the
following terms and conditions:
i. Yates shall resign his employment with Bankers Trust
effective April 16, 1996.
ii. In full and complete satisfaction of all known and
unknown claims against Bankers Trust, and in consideration for
executing this Agreement, Yates will be entitled to the
following:
(1) On or about the eighth (8th) day following
his execution of this Agreement, which Yates acknowledges may not
be executed prior to April 16, 1996, his last day of employment,
Bankers Trust shall continue Yates' base salary as a separation
allowance for the period April 16, 1996 through March 11, 1997.
Yates' group health insurance benefits will also be continued
during this period, unless he obtains other employment, in which
event he shall be paid the balance of his separation allowance in
a lump sum, his group health insurance benefits will cease, and
he shall be entitled to continue such benefits at his own
expense, in accordance with applicable federal law.
(2) On or about March 11, 1997, provided he has
not materially violated any of the provisions of this Agreement,
Yates will be provided with a $330,303.00 lump sum payment, less
applicable taxes. The acceptance of said lump sum payment by
Yates, shall constitute a reaffirmation of the waiver and release
provisions set forth in paragraph iv of this Agreement, releasing
all claims by Yates against Bankers Trust, whether known or
unknown, as of the date of his acceptance of such payment.
<PAGE>
(3) Bankers Trust acknowledges that Yates has a
Restricted Stock award outstanding of 23,900 shares. On or about
April 16, 1996, provided he has executed this Agreement, such
shares will vest and be distributed to Yates.
Yates acknowledges that the payments and
benefits set forth above shall be subject to applicable federal,
state and local taxes, and all other deductions as required by
law and Bankers Trust policy. Yates shall have no duty to seek
other employment or to become self-employed to mitigate any
payments or benefits to which he is entitled pursuant to this
Agreement nor shall there be any offset against such payments or
benefits in the event of such employment or self-employment. If
Yates dies prior to the payment of any of the amounts set forth
in this paragraph, Yates' estate or his designated beneficiary
shall be paid such amounts. Bankers Trust reserves the right to
accelerate any of the severance payments due Yates during the
period April 17, 1996 through March 11, 1997. In such event,
Yates' group health insurance benefits shall be handled as if he
had obtained other employment, in accordance with paragraph ii(1)
above.
iii Yates agrees that he will not publicly or privately
disparage Bankers Trust or any of the Company's products,
services, divisions, affiliates, related companies or current or
former officers, directors, trustees, employees, agents,
administrators, representatives or fiduciaries. The Company
agrees that it will not publicly or privately disparage Yates.
Notwithstanding the foregoing, neither Yates nor the Company will
be restricted from providing information about the other as
required by a court or governmental agency or by applicable law.
Further, the Company shall not be restricted from reporting
information regarding Yates' performance while employed by the
Company to internal or external auditors, special counsel or
investigators, any applicable enforcement agencies, regulatory
agencies, insurance carriers or in litigation involving Yates or
the Company.
iv. In exchange for the consideration described in
paragraphs ii(1), (2) and (3), Yates hereby releases Bankers
Trust from any and all liability arising from any and all acts
including, but not limited to, those arising out of his
employment relationship with the Company or his separation
therefrom, or under any contract, tort, federal, state, or local
fair employment practices or civil rights law including, but not
limited to, Title VII of the Civil Rights Act of 1964, the Civil
Rights Act of 1991, the Age Discrimination in Employment Act of
1967, the Older Workers' Benefits Protection Act of 1990, the
Civil Rights Act of 1866, the Americans With Disabilities Act of
1990, the Employee Retirement Income Security Act of 1974, the
<PAGE>
New York State and New York City Civil Rights Laws, or any claim
for physical or emotional distress or injuries, or any other duty
or obligation of any kind or description. This release shall
apply to all known, unknown, unsuspected and unanticipated
claims, liens, injuries and damages including, but not limited
to, claims of employment discrimination, indemnity for discharge,
or claims sounding in tort or in contract, express or implied, as
of the date of the execution of this Agreement. Notwithstanding
the foregoing, Yates does not release his right to have the
Company perform its obligations under this Agreement, including
without limitation, his right to (i) indemnification pursuant to
the by-laws of the Company and applicable Directors' and
Officers' liability insurance as hereinafter described, (ii) any
compensation or benefits pursuant to any plan or program that is
part of the subject matter of this Agreement, (iii) pension,
health or similar benefits under the Company's retirement
programs.
Yates also agrees not to initiate any legal action,
charges or complaints against Bankers Trust in any forum
whatsoever, in connection with the claims released by him
pursuant to this paragraph.
Bankers Trust expressly denies that it has violated any
such law, statute, ordinance, contract, duty or obligation
whatsoever, or that it committed any tort or engaged in any
wrongful conduct with respect to Yates. Yates acknowledges that
the consideration described in this Agreement is in excess of
that to which he was otherwise entitled upon his termination
under either applicable law, Company policy, or pursuant to any
contractual agreement he may have with Bankers Trust.
Bankers Trust agrees that Yates is entitled to
indemnification to the fullest extent provided by the Company for
Directors and Officers as set forth in the Company's bylaws as
may exist from time to time, but in no event less favorable than
available to other Directors and Officers. Yates shall also be
entitled to Directors' and Officers' liability insurance in
accordance with the terms of the policy provided by the Company
for its Directors and Officers as amended from time to time.
Subject to the terms of such bylaws, Yates shall have the right
to choose his own counsel in connection with any investigatory or
legal proceedings, in which Yates may be or become involved, and
shall be reimbursed for reasonable attorneys' fees in connection
with any such investigation or litigation. Additionally, Yates
shall be given reasonable access to Company books and records
relevant to such investigatory or legal proceedings to the extent
permitted by the Company's bylaws or applicable rules,
regulations or law.
<PAGE>
v. The terms of this Agreement, the claims that have been
or could have been raised against Bankers Trust as of the date of
this Agreement, and the facts and circumstances underlying any
such claim shall not be admissible by Yates in any litigation or
proceeding in any forum, except as required by law, for any
purpose other than to secure enforcement of the terms and
conditions of this Agreement.
vi. Neither Yates nor the Company will publish, publicize,
or disseminate or cause to be published, publicized or
disseminated or permit to be published, publicized or
disseminated, directly or indirectly, and will keep entirely
confidential any information, data or documents (1) relating to
Yates' employment with and separation from Bankers Trust, except
that either party may discuss the fact that he was employed by
Bankers Trust, his title, salary, compensation, responsibilities
and that he resigned his position; or (2) relating to the terms
of this Agreement or the fact that this Agreement exists, except
for (a) the purpose of enforcing this Agreement should that ever
become necessary; or (b) disclosures required by a court or
governmental agency or by applicable law, or to any investigatory
or regulatory agency with authority over the Company. Yates may
disclose the terms of this Agreement to his spouse, accountants,
attorneys or tax preparers, and, the Company may disclose the
terms of this Agreement to its accountants, attorneys, tax
preparers, its employees who have a need to know such terms, and
as otherwise set forth above. Should this document or any terms
hereof be disclosed publicly pursuant to applicable law, the
terms of this Agreement with respect to non-disclosure shall no
longer be applicable with respect to any items otherwise made
public.
Yates further agrees that he will not publish,
publicize or disseminate, or cause to be published, publicized or
disseminated or permit to be published, publicized or
disseminated, directly or indirectly, and will keep entirely
confidential any confidential information, data or documents
relating to the operations of the Company, including, but not
limited to, any trade secrets or other proprietary information,
except as may be required by a court or governmental agency.
Confidential information shall mean all information that is not
known or available to the public concerning the business of the
Company relating to its financial products, product development,
trade secrets, customers, suppliers, finances, and business plans
and strategies, including know-how, financial information
concerning the Company and its customers and specifications,
programs, documentation and manuals relating to all financial
models, telecommunications and computer systems, software,
hardware and applications developed or used by Bankers Trust.
Confidential information shall include information that is, or
becomes, known to the public as a result of a breach by Yates of
<PAGE>
the provisions of this Agreement. Bankers Trust reserves the
right to seek appropriate damages, including attorneys' fees and
injunctive relief, should Yates violate this Agreement.
vii. Yates agrees that during the one-year period following
the execution of this Agreement, he will not, directly or
indirectly, personally solicit or induce or cause any third party
to solicit or induce any Bankers Trust employees to work for him
or any competitor of the Company, it being understood that if any
such employee contacts Yates on his or her own initiative, Yates
may thereafter discuss with such employee his or her working for
him or a competitor, provided that in such situations, Yates
agrees to notify the Chief Legal or Human Resources Officer of
Bankers Trust and advise either executive of such contact and of
the employee(s) making such contact in writing, before extending
any offer of employment to such individual(s).
viii. The failure of either party to insist upon strict
adherence to any term of this Agreement on any occasion shall not
be considered a waiver thereof or deprive such party of the right
thereafter to insist upon strict adherence to that term or any
other term of the Agreement. Any waiver must be in writing and
signed by Yates or any authorized officer of the Company, as the
case may be.
ix. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving
effect to its conflicts of laws provisions.
x. If any of the provisions, terms, clauses, or waivers or
releases of claims or rights contained in this Agreement are
declared illegal, unenforceable, or ineffective in a legal forum,
such provisions, terms, clauses, waivers, releases or claims or
rights shall be deemed severable, such that all other provisions,
terms, clauses, waivers, releases of claims and rights contained
in this Agreement shall remain valid and binding upon both
parties.
xi. Yates agrees to voluntarily cooperate with the
independent counsel's investigation of Bankers Trust's
derivatives business, and with the Company in connection with any
threatened, actual or future litigation or investigations by
federal, state, or local agencies involving the Company, whether
administrative, civil or criminal in nature, in which and to the
extent his cooperation is deemed necessary by the Company in its
sole discretion. The Company shall reimburse Yates for all
reasonable out-of-pocket travel expenses incurred by him in
connection with his voluntary cooperation under this paragraph.
Such expenses shall be reimbursed after his submission to the
Company of statements in such reasonable detail as the Company
may require. Yates shall be entitled to a fee of $500 per hour
<PAGE>
for furnishing such voluntary cooperation, such fee to be paid
promptly following his submission of a statement therefor.
xii. Yates acknowledges that he has had up to twenty-one
(21) days from the date he received this Agreement to consider
the terms of this Agreement and further, acknowledges that he is
fully aware of its contents and of its legal effects. Yates is
also hereby advised by Bankers Trust to consult with an attorney
regarding this Agreement.
xiii. This Agreement has been executed freely, knowingly
and voluntarily by Yates without duress, coercion, or undue
influence, with a full and free understanding of its terms. This
Agreement is revocable by either party for seven (7) days
following its execution, after which time it shall become
effective and enforceable. Notice of revocation must be sent in
writing to the other party within the seven (7) day revocation
period after this Agreement is signed by the party seeking
revocation. If Yates wishes to revoke his agreement, his written
notice of revocation must be received within the seven (7) day
revocation period by Peter Gurney, Managing Director, at the
following address: Bankers Trust New York Corporation, 130
Liberty Street, New York, New York.
xiv. This Agreement supersedes all prior oral and written
agreements, if any, with respect to the subject matter hereof
between the parties. This Agreement may not be changed except by
a writing signed by Yates and an authorized management representa
tive of Bankers Trust.
AGREED: AGREED:
BANKERS TRUST NEW YORK
CORPORATION on behalf of
Bankers Trust
/S/TIMOTHY T YATES By: /S/MARK BIELER
TIMOTHY T. YATES Mark Bieler
Executive Vice President
April 17, 1996 April 10, 1996
Date Date
<PAGE> the foregoing Settlement and
Non-disclosure Agreement, and
duly acknowledged to me that
he executed the same.
On this 17th day of April
1996, before me personally
came TIMOTHY T. YATES to me
known to be the individual
On this 10th day of April
described in and who executed
1996, before me personally
came Mark Bieler, authorized
representative for Bankers
Trust New York Corporation, to
me known to be the individual
described in and who executed
the foregoing Settlement and
Non-disclosure Agreement, and
duly acknowledged to me that
he executed the same.
/S/JOSEPHINE A. MONTI
Notary Public /S/PERRY V.CAPITANI
Notary Public
<PAGE>
<PAGE>
EXHIBIT 10(iii)(A)(2)
SETTLEMENT AND NON-DISCLOSURE AGREEMENT
CHARLES S. SANFORD, JR., on his own behalf and on
behalf of his heirs, executors, administrators, attorneys,
successors and assigns (hereinafter collectively referred to as
"Sanford"), and BANKERS TRUST NEW YORK CORPORATION, on its own
behalf and on behalf of its subsidiaries, divisions, affiliates,
successors and assigns, and its and their respective officers,
directors, agents, representatives and employees (hereinafter
collectively referred to as "Bankers Trust" or the "Company"),
have reached the within agreement ("Agreement") in settlement of
any and all issues related to Sanford's employment with, and
retirement from the employ of, Bankers Trust, such Agreement
being reached on the following terms and conditions:
i. Sanford shall resign his position as Chairman of Bankers
Trust effective April 16, 1996 and his employment on April 30,
1996.
ii. In recognition of his many years of dedicated service to
Bankers Trust and of his retirement from the Company and for
executing this Agreement, Sanford will be provided with the
following:
(1) On or about the eighth (8th) day following his execution
of this Agreement, which Sanford acknowledges may not be executed
prior to April 30, 1996, his last day of employment, Bankers
Trust shall contribute $2,000,000 to Sanford's ADCAP account.
Sanford's entire ADCAP account will be distributed to him on or
about May 31, 1996. Sanford hereby acknowledges and further
agrees that the $2,000,000 contribution to his ADCAP account made
pursuant to this paragraph, will be forfeited and he will be
required to tender back such contribution to Bankers Trust within
thirty (30) days of a request therefor, if he materially violates
any provisions of this Agreement, within the one-year period
following its execution. Sanford also acknowledges that should
any request be made by Bankers Trust for the tender back of this
contribution in the event of his material violation of this
Agreement, and should he fail to tender back such contribution
within the requisite thirty (30) day period, he shall be
<PAGE>
responsible for Bankers Trust's attorneys' fees and costs
incurred in any action to recover such contribution.
(2) On April 16, 1996, Bankers Trust shall provide Sanford
with 75,000 stock options under the terms of the BTNY Corporation
Stock Option Stock Award Plan. These options shall vest on the
eighth (8th) day following the execution of this Agreement. Such
options shall become first exercisable on April 16, 1997. These
options together with all other previously awarded options that
are currently outstanding shall continue to become exercisable in
accordance with their terms and, notwithstanding any provisions
of such options to the contrary, shall remain exercisable for the
original terms under which they have been granted. That is,
options which have previously been granted to Sanford and are
currently outstanding may be exercised for the remainder of the
original ten year exercise period. Any options remaining
unexercised at the end of the respective periods will be
forfeited.
Sanford understands that upon execution of this
Agreement by the Company, any Incentive Stock Options outstanding
will be deemed "Modified" and thereby lose their tax qualified
status.
(3) Bankers Trust acknowledges that Sanford has a
Restricted Stock award outstanding of 63,500 shares. On or about
the eighth (8th) day after he executes this Agreement, such
shares will vest and be distributed to Sanford.
Sanford acknowledges that the payments and benefits set forth
above shall be subject to applicable federal, state and local
taxes, and all other deductions as required by law and Bankers
Trust policy. Sanford shall have no duty to seek other
employment or to become self-employed to mitigate any payments or
benefits to which he is entitled pursuant to this Agreement nor
shall there be any offset against such payments or benefits in
the event of such employment or self-employment. If Sanford dies
prior to the payment of any of the amounts set forth in this
paragraph, Sanford's estate or his designated beneficiary shall
be paid such amounts.
iii. In exchange for the consideration described in
paragraphs ii(1), (2) and (3), Sanford hereby releases Bankers
Trust from any and all liability arising from any and all acts
including, but not limited to, those arising out of his
employment relationship with the Company or his separation
therefrom, or under any contract, tort, federal, state, or local
fair employment practices or civil rights law including, but not
limited to, the Age Discrimination in Employment Act of 1967 as
amended by the Older Workers' Benefits Protection Act of 1990, or
any claim for physical or emotional distress or injuries, or any
other duty or obligation of any kind or description.
<PAGE>
This release shall apply to all known, unknown, unsuspected and
unanticipated claims, liens, injuries and damages including, but
not limited to, claims of employment discrimination, indemnity
for discharge, or claims sounding in tort or in contract, express
or implied, as of the date of the execution of this Agreement.
Notwithstanding the foregoing, Sanford does not release his right
to have the Company perform its obligations under this Agreement,
including without limitation, his right to (i) indemnification
pursuant to the by-laws of the Company, and applicable Directors'
and Officers' Liability insurance as hereafter described (ii) any
compensation or benefits pursuant to any plan or program that is
part of the subject matter of this Agreement, (iii) pension,
health or similar benefits under the Company's retirement
programs.
Sanford also agrees not to initiate any legal
action, charges or complaints against Bankers Trust in any forum
whatsoever, in connection with the claims released by him
pursuant to this paragraph.
Bankers Trust expressly denies that it has
violated any such law, statute, ordinance, contract, duty or
obligation whatsoever, or that it committed any tort or engaged
in any wrongful conduct with respect to Sanford. Sanford
acknowledges that the consideration described in this Agreement
is in excess of that to which he was otherwise entitled upon his
termination under either applicable law, Company policy, or
pursuant to any contractual agreement he may have with Bankers
Trust.
Bankers Trust agrees that Sanford is entitled to
indemnification to the fullest extent provided by the Company for
Directors and Officers as set forth in the Company's bylaws as
may exist from time to time, but in no event less favorable than
available to other Directors and Officers. Sanford shall also be
entitled to Directors' and Officers' liability insurance in
accordance with the terms of the policy provided by the Company
for its Directors and Officers as amended from time to time.
Subject to the terms of such bylaws, Sanford shall have the right
to choose his own counsel in connection with any investigatory or
legal proceedings, in which Sanford may be or become involved,
and shall be reimbursed for reasonable attorneys' fees in
connection with any such investigation or litigation.
Additionally, Sanford shall be given reasonable access to Company
books and records relevant to such investigatory or legal
proceedings to the extent permitted by the Company's bylaws or
applicable rules, regulations or law.
iv. The terms of this Agreement, the claims that have
been or could have been raised against Bankers Trust as of the
date of this Agreement, and the facts and circumstances
underlying any such claim shall not be admissible by Sanford in
any litigation or proceeding in any forum, except as required by
law, for any purpose other than to secure enforcement of the
<PAGE>
terms and conditions of this Agreement.
v. Neither Sanford nor the Company will publish,
publicize, or disseminate or cause to be published, publicized or
disseminated or permit to be published, publicized or
disseminated, directly or indirectly, and will keep entirely
confidential any information, data or documents (1) relating to
Sanford's employment with and separation from Bankers Trust,
except that either party may discuss the fact that he was
employed by Bankers Trust, his title, salary, compensation,
responsibilities and that he resigned his position; or (2)
relating to the terms of this Agreement or the fact that this
Agreement exists, except for (a) the purpose of enforcing this
Agreement should that ever become necessary; or (b) disclosures
required by a court or governmental agency or by applicable law,
or to any investigatory or regulatory agency with authority over
the Company. Sanford may disclose the terms of this Agreement to
his spouse, accountants, attorneys or tax preparers, and, the
Company may disclose the terms of this Agreement to its
accountants, attorneys, tax preparers, its employees who have a
need to know such terms, and as otherwise set forth above.
Should this document or any terms hereof be disclosed publicly
pursuant to applicable law, the terms of this agreement with
respect to non-disclosure shall no longer be applicable with
respect to any items otherwise made public.
Sanford further agrees that he will not publish,
publicize or disseminate, or cause to be published, publicized or
disseminated or permit to be published, publicized or
disseminated, directly or indirectly, and will keep entirely
confidential any confidential information, data or documents
relating to the operations of the Company, including, but not
limited to, any trade secrets or other proprietary information,
except as may be required by a court or governmental agency.
Confidential information shall mean all information that is not
known or available to the public concerning the business of the
Company relating to its financial products, product development,
trade secrets, customers, suppliers, finances, and business plans
and strategies, including know-how, financial information
concerning the Company and its customers and specifications,
programs, documentation and manuals relating to all financial
models, telecommunications and computer systems, software,
hardware and applications developed or used by Bankers Trust.
Confidential information shall include information that is, or
becomes, known to the public as a result of a breach by Sanford
of the provisions of this Agreement. Bankers Trust reserves the
right to seek appropriate damages, including attorneys' fees and
injunctive relief, should Sanford violate this Agreement.
vi. The failure of either party to insist upon strict
adherence to any term of this Agreement on any occasion shall not
be considered a waiver thereof or deprive such party of the right
thereafter to insist upon strict adherence to that term or any
<PAGE>
other term of the Agreement. Any waiver must be in writing and
signed by Sanford or any authorized officer of the Company, as
the case may be.
vii. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without
giving effect to its conflicts of laws provisions.
viii. If any of the provisions, terms, clauses, or
waivers or releases of claims or rights contained in this
Agreement are declared illegal, unenforceable, or ineffective in
a legal forum, such provisions, terms, clauses, waivers, releases
or claims or rights shall be deemed severable, such that all
other provisions, terms, clauses, waivers, releases of claims and
rights contained in this Agreement shall remain valid and binding
upon both parties.
ix. Sanford agrees to voluntarily cooperate with the
independent counsel's investigation of Bankers Trust's
derivatives business, and with the Company in connection with any
threatened, actual or future litigation or investigations by
federal, state, or local agencies involving the Company, whether
administrative, civil or criminal in nature, in which and to the
extent his cooperation is deemed necessary by the Company in its
sole discretion. The Company shall reimburse Sanford for all
reasonable out-of-pocket travel expenses incurred by him in
connection with his voluntary cooperation under this paragraph.
Such expenses shall be reimbursed after his submission to the
Company of statements in such reasonable detail as the Company
may require. Sanford shall be entitled to a fee of $2,500 per
day (pro-rated for a portion of a day) for furnishing such
voluntary cooperation, such fee to be paid promptly following his
submission of a statement therefor.
x. Sanford acknowledges that he has had up to twenty-
one (21) days from the date he received this Agreement to
consider the terms of this Agreement and further, acknowledges
that he is fully aware of its contents and of its legal effects.
Sanford is also hereby advised by Bankers Trust to consult with
an attorney regarding this Agreement.
xi. This Agreement has been executed freely, knowingly
and voluntarily by Sanford without duress, coercion, or undue
influence, with a full and free understanding of its terms. This
Agreement is revocable by either party for seven (7) days
following its execution, after which time it shall become
effective and enforceable. Notice of revocation must be sent in
writing to the other party within the seven (7) day revocation
period after this Agreement is signed by the party seeking
revocation. If Sanford wishes to revoke his agreement, his
written notice of revocation must be received within the seven
(7) day revocation period by Peter Gurney, Managing Director, at
the following address: Bankers Trust New York Corporation, 130
Liberty Street, New York, New York.
<PAGE>
xii. This Agreement supersedes all prior oral and
written agreements, if any, with respect to the subject matter
hereof between the parties. This Agreement may not be changed
except by a writing signed by Sanford and an authorized
management representative of Bankers Trust.
AGREED: AGREED:
BANKERS TRUST NEW YORK
CORPORATION on behalf of
Bankers Trust
/S/CHARLES S. SANFORD, JR. By: /S/MARK BIELER
CHARLES S. SANFORD, JR. Mark Bieler
Executive Vice President
April 30, 1996 April 10, 1996
Date Date
On this 30th day of April 1996, On this 10th day of April
before me personally came CHARLES 1996, before me personally
S. SANFORD, JR. to me known to be came Mark Bieler, authorized
the individual described in and representative for Bankers
who executed the foregoing Trust New York Corporation, to
Settlement and Non-disclosure me known to be the individual
Agreement, and duly acknowledged described in and who executed
to me that he executed the same. the foregoing Settlement and
Non-disclosure Agreement, and
duly acknowledged to me that
he executed the same.
/S/PERRY V. CAPITANI /S/PERRY V. CAPITANI
Notary Public Notary Public
<PAGE>
<PAGE>
10(iii) A (3)
BT Investments (Australia) Limited Group
Notional Equity Participation Plan
Plan Document
<PAGE>
1. Purpose
The purpose of The Notional Equity Participation Plan is to
attract, retain and motivate key employees of BT Investments
(Australia) Limited Group ("BTIA") ("Eligible Employee(s)")
to exert their best efforts on behalf of Bankers Trust New
York Corporation ("BTNY") and its subsidiaries by providing a
direct link between the creation of shareholder value and the
rewards realized by such employees.
2. Definitions
As used in this Plan, the following terms shall have the
meanings set forth below:
a) "Award Agreement" means an agreement between a
Participant and the Company evidencing a notional award
of Equity Participation ("EP") Units pursuant to the
Plan. The EP Unit Agreement shall remain in effect
until all EP Units and Plan Shares issued pursuant
thereto have been forfeited, converted, terminated or
distributed (Exhibit I).
b) "BTIA Management" shall be the Management Committee of
BTIA or its designate.
c) "BTNY Board" shall mean the Board of Directors of BTNY.
d) "Company" means BTIA or any of its subsidiaries.
e) Deferral Period - shall mean a five-year period
following the Performance Period in
which Plan Shares are held in participants' accounts.
f) "EP Unit" shall mean an Equity Participation Unit
notionally awarded to a Participant, which shall be
valued at the end of the Performance Period and
converted into Plan Shares. The specific number of EP
Units notionally awarded to each Participant will be
specified in the individual's Award Agreement.
g) "HR Committee" shall mean the Human Resources Committee
of the Board of Directors of BTNY.
h) "Management Committee" shall mean the Management
Committee of BTNY or its designated successor.
i) "Participant" shall mean any Eligible Employee that is a
party to an Award Agreement.
<PAGE>
j) "Performance Curve" means the established relationship
between performance and EP Unit value.
k) "Performance Period" means the one-year period that will
serve as the basis for the valuation of EP Units, based
on actual performance as measured by the Performance
Curve.
1) "Plan Shares" means notional shares of BTNY common stock
converted from the value of EP Units at the end of the
Performance Year. The methodology for converting the
value of EP units into Plan shares shall be determined
by the Management Committee subject to approval by the
HR Committee. The dollar value of Plan Shares will be
paid as a bonus at the end of the Deferral Period.
Dividend equivalents will be paid on Plan shares in cash
as taxable salary.
m) "Vesting Date" means the second anniversary following
the end of the Performance Year and is the date on which
all related awards under the Plan are to become
nonforfeitable.
3. Eligibility
Upon recommendation by BTIA Management and approval by the
Management Committee for recommendation to the HR Committee
and approval by the HR Committee, participation in this Plan
will be limited to those employees with the title of Vice
President and above who in the opinion of the BTIA Management
have the ability to impact the future direction and success
of the Company. The determination of the size of an
individual's award will be dependent on his or her ability to
contribute to the overall achievement of the Company's long-
term strategic goals and objectives in the opinion of the
BTIA Management and subject to approval by both the
Management Committee and the HR Committee. Specifically,
this includes individual criteria such as:
Role in setting goals for and managing the Company,
Functional responsibility within the Company, and the
potential impact on the Company's long-term success,
Demonstrated success and track record in carrying out
responsibilities,
Critical skills and difficulty to replace.
Award recommendations will be made on an annual basis by BTIA
Management to and for approval by the Management Committee
for further recommendation and approval by the HR Committee.
<PAGE>
4. EP Unit Awards
Participants will be notionally awarded EP Units based on a
frequency selected by the HR Committee. The number of EP
Units awarded to an individual will be specified in the Award
Agreement. EP Units are subject to a valuation process which
is based on performance criteria approved by the Management
Committee for recommendation to and approval by the HR
Committee (e.g., annual profit performance of BTNY). Higher
or lower achievements will have a direct relationship to the
assigned value for each unit as determined in the Performance
Curve. Such criteria will be subject to annual review by
BTIA management and subject to final approval by both the
Management Committee and the HR Committee.
An individual's year-end EP Unit value (total EP Units times
year-end unit valuation) will be converted into Plan Shares.
Plan Shares are to earn dividend equivalents equal to the
regular quarterly dividends actually paid to shareholdings on
BTNY common stock.
5. Vesting of Awards
Subject to Sections 6, 9, 10 and 11, all awards granted under
this Plan are to become nonforfeitable on the second
anniversary following the end of the Performance Year
6. Payment of Awards
Subject to section 9, at the end of the Deferral Period, Plan
Shares will be valued and an amount equal to the market value
of the Plan Shares will be paid to the participant as taxable
salary. The participant's net after tax salary paid under
the Plan will be used to purchase BTNY common stock shares in
the participant's name.
7. Administration
This Plan will be administered by BTIA Management, subject to
approval by the Management Committee and the HR Committee.
The HR Committee, based on recommendation by BTIA Management,
as approved by the Management Committee, shall determine:
The employees who will participate
The number of EP Units to be awarded to each Participant
The time or times when EP Units will be awarded
<PAGE>
The HR Committee shall determine:
The Performance Curve schedules at the beginning of each
Performance Period
Any other conditions relating to the award of any EP Unit or Plan
Shares.
The HR Committee will interpret this Plan and make any
determinations necessary in administering this Plan,
including the ability to terminate the Plan at any time.
8. Rights of Participants
EP Units and Plan Shares are solely devices for the
measurement and determination of awards made to Participants
under this Plan and as such:
Do not constitute ownership or any rights of share
ownership in BTIA, BTNY or any of its subsidiaries,
Shall not constitute or be treated as an entitlement to
any specific property of, or to participation in any trust
fund maintained by BTIA, BTNY or any other affiliate or
any of their subsidiaries,
Shall not give the Participants any rights other than
those of an employee of BTIA with respect to unpaid salary
owing where already vested but not yet due.
Shall represent unfunded and unsecured obligations of
BTIA with respect to salary to be paid at the end of the
Deferral Period,
Shall not give Participants any rights to continued
employment with BTIA or continued participation in this
Plan.
9. Termination of Employment
If the employment of a Participant terminates prior to the
last day of the Deferral Period, vesting of awards will be
subject to section 5 and payment, if due, will be made in
accordance with this section.
a. Retirement. When a Participant's employment terminates
as a result of retirement in accordance with the terms
of BTIA's retirement plan, EP Units not yet converted
into Plan Shares will be converted at the end of the
Performance Year. All Plan Shares are to remain
outstanding and payment of awards as taxable salary will
be made at the end of the Deferral Period.
<PAGE>
b. Death. In the event of a Participant's death, the
Participant's estate or beneficiaries will receive
payment of awards (as taxable salary) as held by the
deceased as Plan Shares within 60 days. Any EP Units
not yet converted into Plan shares will be converted at
the end of the Performance Period into Plan Shares and
payment of awards as taxable salary will take place at
that time. Rights to any such payment shall pass by
will or law of descent and payment in the following
order: (a) to beneficiaries so designated by the
Participant; if none, then (b) to a legal representative
of the Participant, if none, then (c) to the persons
entitled thereto as determined by a court of competent
jurisdiction.
c. Disability. In the event a Participant is deemed by the
Company to be disabled, payment of the value of all
outstanding Plan Shares will be made as taxable salary
within 60 days following such determination. Any EP
Units not yet converted into Plan Shares will be
converted at the end of the Performance Year and paid as
taxable salary at that time. Payment will be made to
the Participant, if legally competent, or a committee or
other legally designated guardian or representative if
the Participant is legally incompetent by virtue of such
disability.
d. Other termination. If a Participant's employment is
terminated for any other reason other than for fraud or
gross negligence, except as otherwise provided for in
Section 10 and subject to compliance with the terms of
Section 11, EP Units not yet converted into Plan Shares
will be converted at the end of the Performance Year.
All Plan shares are to remain outstanding and payment of
awards (as taxable salary) will be made at the end of
the Deferral Period.
Irrespective of any other provisions under the Plan, any
Participant whose employment is terminated due to fraud
or gross negligence will forfeit any unvested awards
made to such participant under this Plan.
10. Cancellation of EP Units or EP Accounts
Unless the Award Agreement specifies otherwise, BTIA
Management, subject to approval of the Management Committee
may cancel any unpaid or deferred awards at any time if the
Participant is not in compliance with all applicable
provisions of the EP Unit Agreement, the Plan or any other.
contract between the Participant and the Company.
<PAGE>
11. Covenant Not to Compete or Solicit
a) Participants who resign and move to competitive
employment prior to the Vesting Date forfeit all rights,
other than any dividend equivalents paid prior to such
termination, on unvested awards made under this Plan.
Payment of vested awards will be made at the end of the
Deferral Period.
b) Payment of Awards made to Participants who resign and
move to competitive employment after the Vesting Date of
awards will be made as taxable salary at the end of the
Deferral Period.
c) Participants requested to resign by BTIA and who comply
with the noncompetitive employment condition will
receive payment of awards in accordance with section
9(d).
d) BTIA Management will have absolute discretion to
determine what constitutes competitive employment.
12. Nonassignability
Except pursuant to paragraphs (b) and (c) of Section 9,
payment of the value of Plan Shares as taxable salary shall
not be assignable or transferable or payable to anyone other
than the Participant to whom it was granted.
13. Adjustments
Upon recommendation BTIA Management and approval of the
Management Committee for recommendation to the HR Committee,
the HR Committee shall have the right to make non adverse
adjustments to the Performance Curve if it is deemed that a
significant change in the capital structure or dividend
policy of BTIA or other event has occurred that impacts the
value of the Plan.
14. Corporation's Right to Conduct its Business/Affect Value
This Plan and the existence of outstanding Plan Shares shall
in no way restrict BTNY's ability to make business decisions
affecting BTIA (including, but not limited to, such decisions
as: transactions with affiliates, mergers and dissolutions)
<PAGE>
15. Binding Effect
This Plan shall be binding upon and enforceable against all
successors and assigns of BTIA and BTNY.
16. Amendment, Modification Suspension or Discontinuance of This
Plan
The HR Committee may amend, modify, suspend or terminate the
Plan at any time. However, no such action shall adversely
affect any award rights previously created under the Plan to
with respect to any then outstanding award, without the
Participant's written consent.
No other explanatory materials, statements, representations,
or examples, oral or written, amend the Plan in any manner.
In the event of a conflict between this Plan and the Stock
Option Plan, the latter plan prevails, except to the extent
that any award payable can only be paid as taxable salary in
accordance with Section 6 of this Plan.
17. Effective Date of the Plan
The Plan shall be effective on January 1, 1995.
18. Term of Plan
No awards shall be granted pursuant to the Plan after
December 31, 1996, but Awards theretofore granted may extend
beyond that date.
19. Governing Law
This Plan shall be construed and its provisions enforced and
administered in accordance with the laws of Australia.
<PAGE>
Exhibit I
BT Investments (Australia) Limited Group
NOTIONAL EQUITY PARTICIPATION PLAN
AWARD AGREEMENT
BT Investments (Australia) Limited Group Notional Equity
Participation Plan Award Agreement dated ___________________
between BT Investments (Australia) Limited Group ("BTIA"), a
wholly owned subsidiary group of Bankers Trust New York
Corporation (the "Corporation"), the Corporation and
___________________ (the "Participant").
WHEREAS, the purpose of BTIA Notional Equity Participation Plan
Awards is to aid BTIA in securing and retaining key employees of
outstanding ability and to motivate such employees to exert their
best efforts on behalf of the BTIA, and have a favorable impact on
the management growth and protection of the business of the
Corporation and its subsidiaries;
NOW THEREFORE in consideration of the Participant's services in
the employment of the BTIA, the Human Resources Committee of the
Corporation (the "Committee") notionally grants to the
Participant, XXX Equity Participation Units ("EP Units")
for the 19XX calendar year (the "performance Year") and in
connection with such award, BTIA, the Corporation and the
Participant agree as follows:
1. EP Units will be notionally cash valued on the last business
day of the Performance Period according to a formula approved by
the Committee. For 19XX, the formula is to be based on the net
income before bonuses and taxes of BTIA.
2. The notional cash value of EP Units will be used to compute
the number of notional shares (the "Plan Shares") of common stock
of the Corporation to be credited to the Participant's 19XX BTIA
Notional Equity Participation Plan account. For these purposes,
the number of Plan Shares to be converted from the value of EP
Units is based on the average of the mean high and low trading
prices of the Corporation's common stock as traded on the last day
of each month during the Performance Period. Plan Shares vest on
the second anniversary following the end of the Performance Year.
Three years following vesting, Plan Shares will be valued and an
amount equal to the market value of the Plan Shares will be paid
to the Participant as taxable salary.
<PAGE>
3. The Participant shall not have either voting or dividend
rights with respect to Plan Shares; however, the Participant shall
be entitled to receive from BTIA dividend equivalent payments with
respect to the Plan Shares that will coincide with the dividends
actually paid by the Corporation on its common stock in terms of
both payment amounts and periods. Dividend equivalent payments
with respect to Plan Shares shall be paid as taxable salary.
4. EP Units and Plan Shares may not be sold, assigned,
transferred, pledged or otherwise encumbered.
5. Neither this Agreement nor any action taken under this
Agreement shall be construed as giving any employee any right to
be retained in the employ of BTIA.
6. The Participant acknowledges that the Committee may in its
sole discretion amend the terms and conditions of this Agreement
including retroactive amendments; provided, however, no such
amendment shall impair the Participant's rights (see Section 12 of
the Plan) hereunder without his or her consent.
7. Except as otherwise provided for in this paragraph, the
Participant agrees that if his or her employment terminates prior
to the payment date of this ward, the award will be paid following
the fifth anniversary of the end of the Performance Year. In
cases where the termination is due to disability, Plan Shares will
immediately vest and be valued. To the extent that EP Units have
not yet been converted into Plan Shares, the value of the EP Units
at the end of the Performance Year will be converted into Plan
Shares and valued. The value of the Plan Shares will be paid as
taxable salary within 60 days of the determination of such
disability by BTIA. In the case of death, the Participant's
estate or beneficiaries will receive within 60 days of the date of
death, distribution of the value of Plan Shares held by the
Participant as taxable salary. All EP Units not yet converted
into Plan Shares as of the date of death will be converted into
Plan Shares, valued and paid as taxable salary. In the event of a
Change of Control as defined in Section 5 of the Bankers Trust New
York Corporation 1994 Stock Option and Stock Award Plan, (a) EP
Units will be valued immediately as set forth in the next sentence
and such amount will be paid to the Participant in cash as taxable
salary (b) all Plan Shares held by the Participant will vest and
be immediately distributed in cash as taxable salary. The value
of EP Units at a Change of Control shall equal the value such EP
Units would have had if BTIA had achieved the Net Income before
Bonus and Tax for the Performance Year equal to the Net Income
before Bonus and Tax achieved by BTIA on an annualized basis as of
the date on which the Change of Control Event occurred. In the
event the Participant moves to competitive employment as described
in Section 11 of the Plan following termination of employment with
<PAGE>
BTIA for any reason payment of vested awards as taxable salary
will be made at the end of the Deferral Period and all unvested
awards forfeited. Where the Participant's employment with BTIA
terminates for fraud or gross negligence, all rights granted under
this agreement are void and forfeited to the extent not previously
paid as taxable salary.
This Agreement shall be governed by the laws of Australia.
IN WITNESS THEREOF, the BTIA and the Corporation have duly
executed this BT Investment (Australia) Limited Group Notional
Equity Participation Plan Award Agreement on the Date set forth
above.
BANKERS TRUST NEW YORK CORPORATION
BY ___________________________________________
BANKERS TRUST INVESTMENTS (AUSTRALIA) LIMITED GROUP
BY ___________________________________________
Agreed to this _____ date of _______________ 19 _____
_______________________________________________
Participant
<PAGE>
<TABLE>
EXHIBIT 12(a)
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
COMPUTATION OF CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
(dollars in millions)
<CAPTION>
Six
Months
Ended
Year Ended December 31, June 30,
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Earnings:
1. Income before
income taxes and
cumulative effects
of accounting
changes $ 834 $ 906 $1,550 $ 869 $ 215 $ 413
2. Add: Fixed charges
excluding
capitalized
interest
(Line 10) 3,614 3,099 3,148 3,884 5,356 2,606
3. Less: Equity in undistri-
buted income of
unconsolidated
subsidiaries and
affiliates 31 40 30 45 28 18
4. Earnings including
interest on deposits 4,417 3,965 4,668 4,708 5,543 3,001
5. Less: Interest on
deposits 1,589 1,119 1,013 965 1,359 635
6. Earnings excluding
interest on deposits$2,828 $2,846 $3,655 $3,743 $4,184 $2,366
Fixed Charges:
7. Interest Expense $3,585 $3,072 $3,122 $3,858 $5,330 $2,593
8. Estimated interest
component of net
rental expense 29 27 26 26 26 13
9. Amortization of debt
issuance expense - - - - - -
10. Total fixed charges
including interest on
deposits and excluding
capitalized interest 3,614 3,099 3,148 3,884 5,356 2,606
11. Add: Capitalized
interest - - - - - -
12. Total fixed charges 3,614 3,099 3,148 3,884 5,356 2,606
13. Less: Interest on
deposits
(Line 5) 1,589 1,119 1,013 965 1,359 635
14. Fixed charges excluding
interest on deposits $2,025 $1,980 $2,135 $2,919 $3,997 $1,971
Consolidated Ratios of Earnings
to Fixed Charges:
Including interest on
deposits
(Line 4/Line 12) 1.22 1.28 1.48 1.21 1.03 1.15
Excluding interest on
deposits
(Line 6/Line 14) 1.40 1.44 1.71 1.28 1.05 1.20
</TABLE>
<PAGE>
<TABLE>
EXHIBIT 12(b)
BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
COMPUTATION OF CONSOLIDATED RATIOS OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDEND REQUIREMENTS
(dollars in millions)
<CAPTION>
Six
Months
Ended
Year Ended December 31, June 30,
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Earnings:
1. Income before
income taxes and
cumulative effect
of accounting
changes $ 834 $ 906 $1,550 $ 869 $ 215 $ 413
2. Add: Fixed charges
excluding
capitalized
interest
(Line 13) 3,614 3,099 3,148 3,884 5,356 2,606
3. Less: Equity in undistri-
buted income of
unconsolidated
subsidiaries and
affiliates 31 40 30 45 28 18
4. Earnings including
interest on deposits 4,417 3,965 4,668 4,708 5,543 3,001
5. Less: Interest on
deposits 1,589 1,119 1,013 965 1,359 635
6. Earnings excluding
interest on deposits$2,828 $2,846 $3,655 $3,743 $4,184 $2,366
Preferred Stock Dividend Requirements:
7. Preferred stock dividend
requirements $ 34 $ 30 $ 23 $ 28 $ 51 $ 29
8. Ratio of income from
continuing operations
before income taxes to
income from continuing
operations after income
taxes 125% 142% 145% 141% 145% 143%
9. Preferred stock dividend
requirements on a pretax
basis $ 43 $ 43 $ 33 $ 39 $ 74 $ 41
Fixed Charges:
10. Interest Expense $3,585 $3,072 $3,122 $3,858 $5,330 $2,593
11. Estimated interest
component of net
rental expense 29 27 26 26 26 13
12. Amortization of debt
issuance expense - - - - - -
13. Total fixed charges
including interest on
deposits and excluding
capitalized interest 3,614 3,099 3,148 3,884 5,356 2,606
14. Add: Capitalized
interest - - - - - -
15. Total fixed charges 3,614 3,099 3,148 3,884 5,356 2,606
16. Add: Preferred stock
dividend require-
ments - pretax
(Line 9) 43 43 33 39 74 41
<PAGE>
17. Total combined fixed
charges and preferred
stock dividend require-
ments on a pretax
basis 3,657 3,142 3,181 3,923 5,430 2,647
18. Less: Interest on
deposits
(Line 5) 1,589 1,119 1,013 965 1,359 635
19. Combined fixed charges
and preferred stock
dividend requirements
on a pretax basis
excluding interest on
deposits $2,068 $2,023 $2,168 $2,958 $4,071 $2,012
Consolidated Ratios of Earnings
to Combined Fixed Charges
and Preferred Stock
Dividend Requirements:
Including interest on
deposits
(Line 4/Line 17) 1.21 1.26 1.47 1.20 1.02 1.13
Excluding interest on
deposits
(Line 6/Line 19) 1.37 1.41 1.69 1.27 1.03 1.18
</TABLE>
<PAGE>
BANKERS TRUST NEW YORK CORPORATION
280 PARK AVENUE
NEW YORK, NEW YORK 10017
Geoffrey M. Fletcher
Senior Vice President and
Principal Accounting Officer
August 14, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs:
Accompanying this letter is Bankers Trust New York Corporation's
quarterly report on Form 10-Q for the quarter ended June 30, 1996 (the
"Form 10-Q"). The Form 10-Q is being filed electronically through the
EDGAR System.
If there are any question or comments in connection with the enclosed
filing, please contact the undersigned at 212-250-7098.
Very truly yours,
BANKERS TRUST NEW YORK CORPORATION
By: GEOFFREY M. FLETCHER
Geoffrey M. Fletcher
Senior Vice President and
Principal Accounting Officer
Attachment
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE BANKERS TRUST NEW
YORK CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CONDITION AT JUNE
30, 1996 AND THE CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE
30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,663
<INT-BEARING-DEPOSITS> 2,065
<FED-FUNDS-SOLD> 365
<TRADING-ASSETS> 43,775
<INVESTMENTS-HELD-FOR-SALE> 6,851
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 14,249
<ALLOWANCE> 972
<TOTAL-ASSETS> 114,601
<DEPOSITS> 25,293
<SHORT-TERM> 39,805<F1>
<LIABILITIES-OTHER> 7,094<F2>
<LONG-TERM> 10,709
0
866
<COMMON> 84
<OTHER-SE> 4,217
<TOTAL-LIABILITIES-AND-EQUITY> 114,601
<INTEREST-LOAN> 471
<INTEREST-INVEST> 212
<INTEREST-OTHER> 1,077<F3>
<INTEREST-TOTAL> 3,049
<INTEREST-DEPOSIT> 635
<INTEREST-EXPENSE> 2,593
<INTEREST-INCOME-NET> 456
<LOAN-LOSSES> 5
<SECURITIES-GAINS> 40
<EXPENSE-OTHER> 1,586
<INCOME-PRETAX> 413
<INCOME-PRE-EXTRAORDINARY> 413
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 289
<EPS-PRIMARY> 3.19
<EPS-DILUTED> 3.17
<YIELD-ACTUAL> 1.06
<LOANS-NON> 573
<LOANS-PAST> 2
<LOANS-TROUBLED> 89
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 992
<CHARGE-OFFS> 49
<RECOVERIES> 24
<ALLOWANCE-CLOSE> 972
<ALLOWANCE-DOMESTIC> 233
<ALLOWANCE-FOREIGN> 209
<ALLOWANCE-UNALLOCATED> 530
<FN>
<F1>Short-term borrowings include the following:
Securities sold under repurchase agreements 24,050
Other short-term borrowings 15,755
Total 39,805
<F2>Other liabilities include the following:
Accounts payable and accrued expenses 4,531
Other liabilities 2,563
Total 7,094
<F3>Other interest income includes the following:
Interest-bearing deposits with banks 83
Federal funds sold 59
Securities purchased under resale agreements 469
Securities borrowed 466
Total 1,077
</FN>
</TABLE>
