Bankers Trust New York Corp., in reorganization mode, is disbanding its centralized risk management group and dispatching the troops to client- focused units.
A spokeswoman confirmed that the changes, which seem to be getting favorable notices from investors and others outside the bank, are under way.
She would provide few details except to say the objective is to "align risk management more closely with core business groups."
Employees in the global equity and fixed-income derivatives products groups will be moved into the investment banking unit, spokeswoman Andrea Bergofin said. A third group, risk management advisory, is expected to remain intact, she said.
Bankers Trust has been metamorphosing since the arrival of chairman Frank N. Newman in late 1995. At the time it was reeling from allegations of improprieties in the sales of derivatives.
Mr. Newman set out to change the bank's focus by forging close customer relationships emphasizing cross-selling and the creation of a one-stop corporate bank, analysts said.
Last year Bankers Trust split off the risk management staff in its Asian and Eastern European operations and moved such product-support personnel closer to client teams. The latest moves, which are broader in scope, are a continuation of that effort, analysts said.
"They no longer view risk management as a separate product but as an adjunct to helping clients achieve their objectives," said Ronald Mandle, an analyst at Sanford C. Bernstein & Co.
Bankers Trust is also restructuring further in Asia, said analysts, who do not anticipate seeing a material impact on earnings as a result.
The $122 billion-asset bank, which employs 1,500 in 12 Asian offices, said it would cut 5%, or 75 jobs, there. Bankers Trust also plans to consolidate half its Asian trading and corporate finance activities in Singapore, and the other half in Hong Kong.
Investors have been responding favorably. The share price has risen 6% since late January after floundering for two weeks amid the concern about Asia's financial crisis.
Bankers Trust is not alone is trying to deal with questions of centralization and decentralization of "noncore" functions.
"Banks are finding that it's hard to create a standard knowledge base when all the businesses they're in are different from one another," said Steven Williams, a consultant at M-One Inc. in Phoenix. "Those responsible for supporting the businesses have to have direct knowledge of the business."
The decentralization of risk management could improve cross-selling opportunities by bringing product development closer to customers, said Charles Wendel, president of Financial Institutions Consulting, New York.
"They could be reacting to a feeling that they weren't selling enough or weren't being responsive enough to client needs," he said. "They are trying to have more of a coordinated approach, more of a relationship-oriented approach."
Analysts also said that by disbanding the central group Bankers Trust could spread trading losses around. Because of trading losses in derivatives, risk management services lost $41 million overall in the fourth quarter, after making $3 million in the year-earlier period, the bank said.
