The first year after his arrival at Bankers Trust New York Corp. in September 1995, Frank N. Newman was preoccupied with turning a troubled ship around.

By the end of his second year, the chairman and chief executive officer had turned the vessel into something completely different.

On. Sept. 1, Bankers Trust completed the $1.7 billion purchase of Alex. Brown Inc. of Baltimore, now BT Alex. Brown, one of several securities firms gobbled up by major bank holding companies this year.

Bankers Trust was the first of a string of large commercial banks to make such deals to take advantage of new freedoms to acquire securities and investment firms. The others include NationsBank Corp. (Montgomery Securities), First Union Corp. (Wheat First Butcher Singer), BankAmerica Corp. (Robertson Stephens)-and, just this week, U.S. Bancorp (Piper Jaffray).

The Alex. Brown acquisition reinforced the message Mr. Newman began to send from the day in January 1996 that he became CEO: Bankers Trust was back.

And this was a new Bankers Trust. As became clear in an early Newman deal, the purchase of the mergers-and-acquisitions boutique now known as BT Wolfensohn, Bankers Trust was changing from specializing in trading complicated high-risk products to priding itself on strong and profitable customer relationships.

Wolfensohn helped restore stature to the fallen giant, partially because its chairman, former Federal Reserve chairman Paul A. Volcker, joined the Bankers Trust board.

Alex. Brown's stock-trading and underwriting business also neatly complemented Bankers Trust's bond and loan operations.

But Mr. Newman, 55, was not finished.

A few weeks ago, Bankers Trust said it would acquire the European equity research, underwriting, and trading operations of London-based Natwest Group for $217 million.

It is almost hard to remember how bad things looked two years ago. Scandal and losses related to sales of derivatives products to large corporations had disgraced management and the $140 billion-asset Bankers Trust was rumored to be for sale.

The bank was laboring under a memorandum of understanding with regulators and stood accused of violating anti-racketeering laws by a former customer, Procter & Gamble Co.

The chairman at the time, Charles Sanford, made the call to Mr. Newman, who had just resigned as deputy secretary of the Treasury after two years in the Clinton administration.

A former chief financial officer at Wells Fargo & Co. and BankAmerica Corp., Mr. Newman was credited with helping the latter recover from a real estate lending crisis. He had the kind of squeaky clean, high-integrity image that Bankers Trust needed. But analysts wondered if he was right for such a freewheeling trading organization.

With the New York holding company's return on equity rising to 17.4% in the third quarter from 13.2% at yearend 1996, Mr. Newman has put most of the doubts to rest.

"He has done an amazing job in a very short period of time," said Diane Glossman, a bank analyst at Lehman Brothers. "It takes a special individual to accomplish all that."

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