Alex. Brown & Sons bank analyst Mark Alpert Friday downgraded shares of Fleet Financial Group to "neutral" from "buy," and upgraded shares of Keycorp to "buy" from "neutral."

Fleet shares finished down 25 cents, to $36.875, and Keycorp stock gained 25 cents, to $30.50.

In downgrading Fleet, Mr. Alpert pointed to possible earnings dilution stemming from warrants and dual convertible preferred stock held by Kohlberg Kravis Roberts & Co. The warrants and convertible shares would represent 7.1% of Fleet, following its merger with Shawmut National Corp., and they come due in the next few years.

Mr. Alpert predicted that Fleet would try to prevent KKR from gaining too strong a position in the company by repurchasing the warrants and convertible stock. To do so, he said, Fleet would probably pay KKR a premium equal to $43 a share, or about $870 million.

"We believe Fleet will replace the capital depleted by the purchase through a combination of a negative loan loss provision at Shawmut and Fleet and asset shrinkage," Mr. Alpert said.

As a result, he lowered his 1995 earnings-per-share estimate 6.2% to $3.75 a share, or the same amount Fleet earned last year. And he lowered his 1996 estimate by also 6.2% to $4.55 a share.

Consensus estimates for 1995 are $3.97 a share and $4.62 a share in 1996, according to First Call Corp.

Investors should shift to Keycorp, Mr. Alpert suggested. Unlike Fleet, where earnings are driven by expenses, Keycorp's earnings are driven by strong loan growth, he argued.

He acknowledged that the merger of equals between Keycorp and Society Corp. has not produced the expected revenues, but argued that the outlook is improving.

The management picture is cleared up with the ascension of Robert Gillespie as chief executive, Mr. Alpert said. And the bank has been freeing up capital to buy back shares, he said, forgoing acquisitions except in product lines.

Also last week, analyst Leslie Nelkin at Furman Selz Inc. initiated coverage of Bankers Trust New York Corp. with a "buy" rating.

One of the few analysts on Wall Street with a bullish outlook for the New York company, Mr. Nelkin said Bankers Trust is "underappreciated." Bankers Trust enjoys a strong, diverse business line base, he said, and is not as dependent on its beleaguered derivatives business as many investors think.

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