Bankers Trust New York Corp. may be spinning gold - in the form of lucrative fees-out of distressed international loans.
Taking the lead among U.S. banks in a global asset-sales and securitization specialty, Bankers Trust announced this week that it had beaten out tough competition for a Mexican government mandate to sell off more than $40 billion of problem bank loans.
Last month, similarly, the New York bank won a highly publicized deal from the troubled Nippon Credit Bank Ltd. of Japan to sell tens of billions of dollars of problem assets.
Earlier this year, Bankers Trust did the same with problem loans of Paris-based Credit Lyonnais.
To keep up with such international capital markets growth, Bankers Trust has hired several top-level bankers away from other institutions, including J.P. Morgan & Co., ABN Amro, and Lehman Brothers.
"A large part of Bankers Trust's strategy is based on taking expertise they developed in the States and making use of it overseas," said Raphael Soifer, banking analyst at Brown Brothers, Harriman & Co.
For the Mexican contract, Bankers Trust teamed up with Mexico City-based GBM-Banco del Atlantico. The two banks will co-advise Mexico's central bank on selling the problem bank assets, which the Mexican government took over after a December 1994 financial crisis drove many borrowers into default.
Knowledgeable sources said the fees would be "more than 2.5% on the portfolio" but did not elaborate.
"It's a credit to Bankers Trust that they've been selected by the government to do this," said Jeffrey Manning, a senior director at Rodman & Renshaw Inc., a New York investment bank.
David Brush, managing director at Bankers Trust's BT Securities subsidiary, said he anticipated "strong investor interest in the first portfolio, which comprises mostly performing loans."
The bank added that a first $20 million batch of loans would be ready shortly for sale to investors.
Likely buyers include loan servicers such as Invesco Asset Management, Cargill Inc., Jayhawk Acceptance Corp., and GE Capital Services. The Mexican central bank said about 98% of the asset portfolio is in the form of loans, many secured by real estate.
The central bank added that it expected the sales would continue for about five years.
The Mexican deal came hard on the heels of a stepped up campaign at Bankers Trust to hire top-ranking bankers overseas. This month, its BT Wolfensohn investment banking unit hired Francois Faure, former executive director in the investment banking division of Lehman Brothers, to handle domestic and cross-border mergers and acquisitions for French corporate clients.
That hiring came shortly after Bankers Trust successfully advised on the $12 billion merger of Lyonnaise des Eaux, the French utilities company, with Compagnie de Suez, a financial conglomerate.
David Shimko, a former J.P. Morgan executive and an authority on risk management, joined Bankers Trust in New York, while Wolfgang Graebner, former member of the board of Germany's BHF-Bank, was named senior adviser in Frankfurt responsible for developing German corporate finance.
Bankers Trust also hired Damian Pozzoli, former head of corporate banking for ABN Amro in Buenos Aires, and Salvatore Giannetti 3d, a top Argentine corporate banker from Citicorp, to develop business in Argentina.
Sources close to the bank said the hirings are part of a broader buildup in corporate finance activity in Argentina and an accelerated push into the Brazilian market.
Last month, Bankers Trust and its Brazilian partner, Banco Itau, arranged a $275 million loan for Banco Nacional de Desenvolvimento Economico e Social, the national development bank. It was the first international syndicated medium-term credit to a Brazilian borrower since Brazil defaulted on its foreign borrowings in 1982.