Magazine article American Banker

CEO Sees BT Derivatives Unit in Black by '97

Magazine article American Banker

CEO Sees BT Derivatives Unit in Black by '97

Article excerpt

Bankers Trust New York Corp.'s derivatives business will make money next year, but the unit will never be the earnings juggernaut it was in the early 1990s, the bank's top executive said.

"I expect it to be profitable some time next year, if not before this year is out," said chairman and chief executive Frank Newman.

The derivatives business lost $21 million in the first six months of this year and $202 million last year, when it was still buffeted by 1994's unexpected rise in interest rates. The rate rise decimated the market for its most profitable specialty - contracts used to make leveraged bets on markets, currencies, or rates.

In 1993, the heyday for the leveraged derivatives market, Bankers Trust, the seventh-largest U.S. bank company, earned $336 million, or 31% of its total profits, on derivatives.

"We don't think we'll ever see that kind of profit that we saw in '93," Mr. Newman said. …

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