As recently as two years ago, Deutsche Bank was buying up talent on Wall Street in an aggressive bid to build a top-tier U.S. investment bank. The effort eventually fell victim to rising costs and culture clashes.

Now the European giant is at it again with a plan to acquire Bankers Trust Corp. for $9 billion in cash. Though that would buy a credible presence in key areas of U.S. corporate finance, it would not bring the "bulge-bracket" status Deutsche once craved.

By shifting its sights away from top-tier underwriting, the German bank will have a better shot at success in the U.S. wholesale banking market overall, observers said. Bankers Trust would also strengthen Deutsche Bank's position in an array of other businesses, including asset management, securities processing, and global custody.

"People see it as a play for Deutsche to get into U.S. underwriting," said James Wiener, a consultant with the New York-based firm Oliver Wyman & Co. "But I see it as play for the custody business and a lot of assets under management in" Bankers Trust mutual funds.

"There is a lot of juice in those two businesses," he added.

In investment banking, Deutsche Bank would gain control of Bankers Trust's BT Alex. Brown securities underwriting unit. Though active in initial public offerings and junk bonds, Alex. Brown is significantly different from the high-powered Wall Street firm that Deutsche Bank had tried to build on its own.

In the mid-1990s, Deutsche paid top dollar to attract investment bankers from firms like Merrill Lynch and Morgan Stanley in hopes of playing in the top tier. But infighting among the U.S. recruits and clashes with their European counterparts derailed the effort.

With the pending deal for Bankers Trust, Deutsche Bank has "changed their viewpoint to middle-market (investment) banking coupled with high- quality retail distribution and high-quality research," said Laura J. Lofaro, president of Sterling Resources, an executive recruiting firm in New York. "For pure investment banking, (BT Alex. Brown) is not the top of the heap, but they're respectable."

Though the new Deutsche Bank would not go head-to-head with Wall Street giants like Goldman Sachs and Morgan Stanley, it would give the wholesale operations of Chase Manhattan Corp. and the new BankAmerica Corp. a run for their money, analysts said. It would also compete well against middle-tier investment banks like PaineWebber Inc. and UBS Securities.

"They would be a cut above Chase, and they would be a good alternative to J.P. Morgan," said one private investor close to Bankers Trust. "But they would not be an alternative to Goldman Sachs."

That should help make the new entity easier to manage than the investment bank that Deutsche Bank was trying to construct on its own. For one thing, retaining BT Alex. Brown bankers would be a lot easier than holding on to Wall Street superstars with bulge bracket pedigrees.

"In this climate, where would Bankers Trust people go?" the private investor asked. "Middle-tier firms can't justify adding large groups of people from BT, so they are just as likely to stay at the new Deutsche Bank as they are to go anywhere else."

Still, the proposed deal left some bankers on Wall Street wondering about its prospects. One investment banker, whose firm has hired key Deutsche Bank investment bankers away this year, said the German management style is "over-controlling" for the United States.

"Put simply, that's what's been killing them," the banker said of Deutsche Bank. "Why they keep wanting to do this in the U.S. is beyond me."

Another source familiar with the internal cultures at both Bankers Trust and Deutsche Bank said the German bank is "highly risk-averse" and Bankers Trust walks a "risk tightrope."

Deutsche is getting "a broken bank with serious morale problems in the ranks that in the end doesn't give them what they want."

But with its 1989 acquisition of London's Morgan Grenfell under its belt, Deutsche would likely think twice before trying to impose its culture on Bankers Trust, one observer said. The Morgan Grenfell integration was troubled by clashes between London and Deutsche's Frankfurt bankers.

Adding together their U.S. syndicated lending for the year through Monday, Bankers Trust and Deutsche Bank would rank in the top five, according to Securities Data Co.

The pro forma market share of the combined bank would be 6.8% in mergers and acquisitions advisory, 3.7% in initial public offerings, 6% in high- yield bonds, and 5.2% in syndicated lending.

Nevertheless, investment banking is the key earnings driver for Bankers Trust, responsible for 69%, or $857 million, of pretax income in 1997, according to its annual report. That was compared with $166 million from global custody.

Bankers Trust's asset management business ranks 14th among U.S. firms with $318 billion.

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