Job cuts feared as Bankers Trust downgraded after £78m loss

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The Independent Online

Financial Editor

Bankers Trust shares fell sharply in New York yesterday on reports of large job cuts, big losses and a downgrading by credit rating agencies. Several broking houses put Bankers Trust on sell, following the American investment bank's announcement on Friday that it expects to post a $125m (£78m) loss for the first quarter of 1995.

IBCA, the bank credit rating agency, said yesterday it had placed its rating for Bankers Trust on RatingWatch, with negative implications.

"Bankers Trust has demonstrated skill in managing risk and an unusual ability to adapt to changing markets but those strengths are being tested by the extremely difficult market conditions," IBCA said.

IBCA said the poor performance reflected the extent to which the bank has been hit by the negative publicity from losses at big companies like Procter and Gamble. Standard & Poors also revised its ratings outlook on Bankers Trust to negative from stable.

Bankers Trust has cut about 60 jobs in its derivatives business in recent months and is reportedly planning to cut a further 10 per cent of its 15,000 staff. Insiders reported that executives had been working all weekend to sort out problems at the bank. Bankers Trust stock fell sharply in opening trading yesterday in New York, down by more than $7 to $54.

Michael Metz, an investment strategist at Oppenheimer and Co, said both Bankers Trust and JP Morgan, whose shares were also hit yesterday, were victims of the growing concern over derivatives. "Morgan and Bankers Trust are major factors in derivatives. The big question is how systemic it is."