Bankers Trust New York Corp.'s shares skidded Thursday on new concerns over the bank's exposure in Southeast Asia.
Several analysts said fourth-quarter earnings could be hurt by weak trading revenue and private equity income.
Fueling the slippage in the stock was a rumor that Merrill Lynch & Co. may downgrade the stock today, investors said.
Banking industry analyst Judah S. Kraushaar at Merrill declined to comment. The analyst has had a long-term "accumulate" and intermediate-term "neutral" recommendation on the bank.
Several market sources said they would not be surprised by a downgrading of Bankers Trust.
"The company has been talking down its fourth-quarter earnings for a while," said one trader who declined to be identified. "Analysts have been lowering their estimates on the company left and right."
Indeed, bank analyst Bradley G. Ball at Credit Suisse First Boston lowered his earnings estimates on the company just three days ago.
Mr. Ball said that he continues to be bullish on the company; however, weakness in trading and private equity are going to bring fourth-quarter earnings lower than expected.
"Lower earnings in 40% of BT's earnings base will likely cause earnings per share to fall below prior expectations," wrote Mr. Ball, who has a "strong buy" on the company.
"A decline in private equity gains this quarter (we assume about 50%) causes us to trim our fourth-quarter 1997 earnings per share by a further" 20 cents, to $1.78. CS First Boston adjusted its 1997 earnings per share 3% downward, to $47.60. The 1998 estimate remains $8.80.
Banking analyst Lawrence W. Cohn at Ryan, Beck & Co., Livingston, N.J., also knocked his earnings estimate down on the company.
Mr. Cohn also remains strongly bullish on the money-center, although he said that he expects fourth-quarter earnings to be sluggish.
"Bankers Trust lost money in October because of Asia and Latin America," said Mr. Cohn who has a "strong buy" on the company. "They made money in November, but it wasn't gangbuster. Venture capital results also are expected to be lower in the fourth quarter."
Mr. Cohn lowered his fourth-quarter earnings estimates 11 days ago to $1.70 from $2.20.
"Volatility is the nature of the business," added Mr. Cohn. "The market sells stocks off because of this, so this is an opportunity to buy."
Bankers Trust's shares fell $3.8125, to $121, on a day when most banks stocks were down.
The Standard & Poor's Bank index fell 0.95%, while the Dow Jones industrial average declined 1.39%. The Nasdaq Bank index slipped 0.81% and the S&P 500 slumped 1.06%.
Worries about Southeast Asia continue to trouble investors, traders noted.
"Most of the pressure on the market and the group is from a flameup of concerns over the Southeast Asian markets," noted bank analyst Frank J. Barkocy of Josephthal Lyons & Ross Inc. "These fears are going to stay with us for some time to come."
Another big loser of the day was MBNA Corp. Shares of the Wilmington, Delaware, credit card issuer fell 3.39% on heavy volume as investors grew anxious about the new competitor entering the credit card division.
Citicorp's decision to buy the AT&T Universal Card Services could have MBNA investors worried about the additional competition, noted bank stock trader Andrew Vissicchio of UBS Securities Inc.