Alex. Brown & Sons on Monday announced a reorganization of its fixed- income operation in preparation for its merger with Bankers Trust New York Corp.

The firm said it would scale back its institutional fixed-income operations and eliminate its fixed-rate public finance business. The changes, to take effect immediately, will affect 160 of Alex. Brown's 2,700 employees.

Some of the employees affected will be reassigned to other departments, the firm said. Brown said.

Bankers Trust announced last month that it would acquire the Baltimore- based investment bank for $1.64 billion. The merger is set for completion by the fourth quarter, pending regulatory and shareholder approval.

"It would seem logical to deal with redundancies between Bankers Trust and Alex. Brown," said Raphael Soifer, an analyst with Brown Brothers Harriman. "Bankers Trust is strong in institutional fixed income, while Alex. Brown is strong in the private area, so the two could work together productively in that area."

Alex. Brown said it will still market variable-rate products and continue with its convertible debt business.

Though Bankers Trust has no plans for a reorganization on the scale of Alex. Brown's, it may reduce its equity, sales, and trading staff by approximately 50 executives, said sources familiar with the transaction.

Most observers said that since the deal seems unlikely to fall through, it seemed logical to press ahead.

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