Bankers Trust Corp. insiders are saying that the company's equity, high-yield bond, and merger advisory groups are likely to fare best in the pending merger with Deutsche Bank.

Employees in these areas earned bigger annual bonuses than those in other fixed-income activities and foreign exchange. This seems to confirm what had long been suspected: Fixed-income trading and foreign exchange are likely to lose out in the takeover by the German giant.

Bankers Trust's 1998 bonuses, which were distributed in late January, mostly in the form of restricted shares that can be exercised only after the deal is completed, were reportedly disappointing to some of the bank's fixed-income trading and underwriting units and in foreign exchange, said Bankers Trust sources.

The discontent could lead to a wave of departures. "The troops are massed at the borders," said one insider.

Meanwhile, employees at Deutsche Bank Securities, a U.S. affiliate of the Frankfurt-based bank, are still awaiting word on their 1998 bonuses, which are to be paid at the end of February.

When they announced their merger agreement in November, Deutsche and Bankers Trust said they would set aside a $400 million pool to retain key employees.

Analysts said Deutsche Bank's strengths in fixed income and Bankers Trust's in the complementary equities and high-yield underwriting activities were what made the $10.1 billion deal attractive in the first place.

A discrepancy in bonuses would reflect that "Deutsche Bank is not enamored with all of Bankers Trust's businesses," said Carla D'Arista, an analyst with Friedman Billings Ramsey.

Competitors are said to be taking advantage of the anxiety at Bankers Trust. Charlotte, N.C.-based First Union Corp., for one, has attempted to woo employees to its Wheat First Union investment banking unit in recent weeks, said Bankers Trust employees.

"First Union has a strong appetite to build Wheat First," said analyst Lawrence Cohn of Ryan Beck & Co. "There is obvious uncertainty" at Bankers Trust's Alex. Brown unit, "and it may be culturally easier for them to move to Wheat First than to join a big global bank."

Analysts, citing reports in the German media, said Deutsche Bank is not doing much to allay internal BT concerns. Chairman Rolf Breuer this week reiterated his concern that a snag in the approval of the deal by U.S. regulators could scuttle the merger.

The acquisition "won't be economically viable if there are delays past a certain limit," Mr. Breuer told Deutsche Welle television on Tuesday.

The top executive was in Washington earlier this week helping to negotiate a settlement of Holocaust victims' claims against German companies. As those talks continue, Deutsche Bank and Bankers Trust executives have been telling Wall Street that they are making progress toward completing their transaction on schedule in May.

They filed a merger application with the Federal Reserve Board last month.

Still, market watchers said they are puzzled by Mr. Breuer's mixed signals.

"What he's saying is that the deal is borderline attractive," said Evangelos Kavouriadis, an analyst at Sanford C. Bernstein & Co. "He's playing good cop/bad cop."

Bankers Trust is "committed to this," Mr. Cohn added. "For the relatively senior people at Bankers Trust who are on the fence, this is not good."

Mr. Kavouriadis said Deutsche Bank may achieve just 80% of the cost savings it projected in the deal. That would amount to $556 million (or 840 million German marks), by his calculation.

The two banks originally said they would cut $985 million (1.7 billion German marks), but Mr. Kavouriadis said $300 million of that was double- counted because it was part of a previously announced restructuring at Bankers Trust.

He blames the shortfall on delays. For example, a quarter of the projected savings was to come from layoffs in information technology, but he said they will not happen until after the year-2000 problem is fully addressed-not until the middle of next year at earliest.

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