Fed Clears Bankers Trust Takeover

The Federal Reserve approved Deutsche Bank’s proposed $10.1-billion acquisition of Bankers Trust Corp., clearing the final regulatory hurdle to creation of the world’s largest financial services company. At a closed board meeting, the Fed voted 6 to 0 to approve the application by Germany’s biggest bank to take over New York-based Bankers Trust in what would be the largest acquisition of a U.S. bank by a foreign interest. Bankers Trust concentrates on banking for big corporations and does no business with consumers. The newly combined company will have assets of $834 billion and will oversee $688 billion of managed assets. In advance of their meeting, the Fed board of governors had sifted through several issues, ranging from Deutsche Bank’s proposal to settle Holocaust-related claims to Bankers Trust’s ties to a sub-prime lender, Delta Financial Corp., which faces legal challenges for its treatment of borrowers. The regulators apparently were not troubled by Deutsche Bank’s 12% stake in the newly formed DaimlerChrysler. According to U.S. laws that separate banks from other kinds of corporations, banks in this country are prohibited from owning more than 5% of a nonfinancial company.

In a joint statement, Deutsche Bank Chief Executive Rolf Breuer and Bankers Trust Chairman and CEO Frank Newman welcomed the Fed’s approval of the transaction, which they expect to complete as early as next month. The merger is expected to cost about 5,500 jobs.