Uncertainty about lines of succession at Bankers Trust New York Corp. has sent its stock into a two-day slide.
The price of Bankers Trust shares dropped $1.25 Wednesday after chairman Charles S. Sanford's unexpected retirement announcement. The share price continued to fall Thursday, closing at $57.50, off 50 cents as investors pondered the implications of his departure.
Although Bankers Trust said its chairman's retirement by midyear 1996 had been expected, many observers were jarred because the bank failed to name president Eugene Shanks as his successor.
"If Shanks was appointed, it would have been business as usual," said analyst George Salem of Gerard Klauer Mattison in New York.
The failure to name him, Mr. Salem said, "implies bringing somebody different in, somebody with a fresh, clean perspective and probably a new plan to reenergize Bankers Trust. To me, that means a potential for turmoil in the organization."
One analyst, Francis X. Suozzo of S.G. Warburg & Co., concluded that under new management Bankers Trust's $4 dividend might be cut in half. His report prompted some of the selling Wednesday.
Mr. Sanford's resignation came at the end of a difficult year for the bank company, which the chairman has positioned as a derivatives trading powerhouse. Bankers Trust has been sued by clients whose derivatives contracts with the bank soured when rates rose last year, and the bank was fined for alleged deceptions in marketing the products.
These troubles were capped by a $157 million first-quarter loss.
The latest selloff of Bankers Trust stock, which traded for as much as $84.25 a share before last year's collapse, came despite predictions that the trading environment is about to bounce back.
Ronald Mandle, banking analyst at Sanford C. Bernstein & Co., rates Bankers Trust a "buy," saying its stock is "reasonably valued" for the intermediate term and positioned to benefit from a rebound in trading.
Although he acknowledged that the retirement announcement created some uncertainly, Mr. Mandle said Bankers Trust will likely stay on the same strategic course.
"I think there'll be some shift, to focus more on overall relationships," he said. "I don't think you're going to see radical near- term changes."
Raphael Soifer of Brown Brothers, Harriman & Co. agreed that the board appears committed to the general strategy Mr. Sanford has laid out. He added that Mr. Shanks could still eventually be named chairman.
But he said he is not about to change the "neutral" rating he gave the stock after the first-quarter results. "It would be very difficult to recommend a stock for the long term when you don't know who the CEO is going to be," he said.
