Bankers Trust Corp. has become the latest subject of the Securities and Exchange Commission's ongoing review of the banking industry's loan-loss reserve practices.

The $127 billion-asset bank, which is nearing the completion of its merger into Deutsche Bank AG, disclosed Monday that it had received a letter from the SEC related to the way it calculates its allowance for loan losses.

The disclosure was contained in the bank's quarterly SEC filing. It did not say whether the SEC found Bankers Trust to have created more or fewer reserves than needed.

In general, the SEC is concerned that banks may be manipulating earnings by overbuilding reserves in good times to be drawn down in bad times.

"The SEC is waging a campaign against earnings management," said Charles Horn, a banking lawyer at Mayer, Brown & Platt in Washington. "The issue is going to arise with banks with significant international exposures," he added. "They tend to be more conservative (with reserves) because of the volatility." The SEC wants banks to justify their policies.

Bankers Trust said it is responding to the SEC letter by "undertaking a comprehensive review" of its accounting policies, and said it would revise them "to improve and ensure a systematic, consistently applied, and adequately documented process."

The bank added it would "enhance its documentation" of how it estimates credit losses and related chargeoffs.

A Bankers Trust spokeswoman declined further comment.

The SEC has been closely examining reserve accounting practices at many banks. In contrast to the SEC's stance, banking regulators have been supportive of more conservative policies regarding loan-loss reserves. In recent months, however, the SEC and bank regulators have worked to find common ground on the issue.

"They want to see consistent policies at each bank and from bank to bank within the industry," said Stephen Biggar, an analyst at S&P Equity Research.

Observers said it was likely that other banks had discussions with the SEC on the topic in recent months, particularly money-centers such as Chase Manhattan Corp., Citigroup, and J.P. Morgan & Co.

Last fall Atlanta-based SunTrust Banks Inc. restated earnings for 1994 through 1996 and cut reserves by $100 million after an SEC investigation into its policies. At the time, SunTrust was nearing the completion of its acquisition of Crestar Financial Corp. in Richmond, Va. That deal was delayed in closing because of the investigation.

Analysts said they did not expect a similar delay in Deutsche Bank AG's $10.1 billion acquisition of Bankers Trust.

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