The Federal Reserve Board on Monday approved Bankers Trust New York Corp.'s plan to buy Alex. Brown Inc., one of the first of an expected wave of mergers between banks and investment houses.

The Fed said the merger would not harm competition for underwriting services, noting that scores of firms actively compete for deals. Also, the combination is expected to allow Bankers Trust to offer more services at lower cost, the Fed said.

To obtain approval, Bankers Trust agreed to divest within two years several Alex. Brown partnerships that offer debt and equity products banking companies may not sell. The banking company also agreed to stop offering new products from these units within six months.

Shareholders of both companies will hold separate meetings Aug. 13 to approve the deal. "We are extremely pleased," said Douglas B. Kidd, senior managing director at Bankers Trust. "We are convinced that combining the capabilities and creativity of these two firms will offer both our clients and our talented people enormous opportunities in years ahead."

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