In 1903 a group of New York national banks formed the
trust company Bankers Trust to provide trust services to customers of state and national banks throughout the country on the premise that it would not lure commercial bank customers away. In addition to offering the usual trust and commercial banking functions, it also acted as a "bankers' bank" by holding the reserves of other banks and trust companies and loaning them money when they needed additional reserves due to unexpected withdrawals. Bankers Trust Company was incorporated on March 24, 1903, with an initial capital of $1.5 million. Despite technically having numerous stockholders, the voting power was held by three associates of
J. P. Morgan. These circumstances led to a widespread perception of it as a Morgan company. Morgan himself held a controlling interest, and
Edmund C. Converse, a steel manufacturer turned financier and then president of
Liberty National Bank, was chosen to serve as Bankers Trust's first president. Bankers Trust quickly grew to be the second-largest U.S. trust company and a dominant Wall Street institution. During the
Panic of 1907, Bankers Trust worked closely with J.P. Morgan to help avoid a general financial collapse by lending money to sound banks. In 1911, it acquired the Mercantile Company and, a year later, the Manhattan Trust Company. In 1914 Converse resigned to become president of
Astor Trust Company, another Morgan company. He was succeeded by his son-in-law
Benjamin Strong Jr. Strong was succeeded by
Seward Prosser, who became the third president of Bankers Trust. By 1915, Bankers Trust was doing approximately $30,000,000,000 of business, consisting solely of business from companies, and no safes or other deposits were from the general public. In 1916, it completed alterations to the Bankers Trust Building, its offices at the corner of
Wall and
Nassau Streets that it had built 4 years earlier. Under Prosser's leadership, Bankers Trust merged with the
Astor Trust Company on April 23, 1917. The merger had been rumored for some time, as both banks had a number of directors in common; Prosser was president of the Bankers and a director of the Astor, and Edmund C. Converse was president of the Astor and a director of the Bankers. The Astor continued "with no change in management, as the uptown branch of the Bankers Trust Company." In October 1917, the company became a member of the Federal Reserve system. Prosser served as president of the merged entity until 1923, at which point he was elected chairman of the board and succeeded by Albert Arthur Tilney. Prosser served as chairman until his death in 1942. Tilney's presidency was short-lived, however, as Henry Cochran, who had been a vice president at the company for twelve years, was elected as the fifth president in 1929. Upon Cochran's elevation to the presidency, Tilney assumed the newly created position of vice chairman of the board of directors. Cochran served as president until 1931, when
S. Sloan Colt was elected the sixth president and Cochran became vice chairman of the board. In 1956,
Alex H. Ardrey became president of Bankers Trust. Ardrey joined the bank in 1930 as a vice president and was elected executive vice president in 1948. In 1957, 42-year-old William Moore, an executive vice president and director, became chairman and chief executive officer of the Bankers Trust Company, succeeding Colt, who had become chairman in 1956, when Ardrey became president. In 1960,
Wallis B. Dunckel, a senior vice president who had been with the bank since 1923, was elected president of Bankers Trust to succeed Ardrey, who was elected vice chairman. In 1966, Alfred Brittain III, then head of the foreign department, was elected president of Bankers Trust to succeed Dunckel, who retired. In 1966, Bankers Trust acquired a one-third interest in an
Antwerp banking company, Banque G.&C. Kreglinger, S.A., which was renamed Banque de
Benelux after the transaction. The other two-thirds partners were Plouvier et Cie., S.A., a Belgian group composed of the former Kreglinger owners, and L'Union des Mines-La Henin, a French investment and holding company in which Bankers Trust had an equity interest.
1980s and early 1990s In 1980, Bankers Trust exited retail banking under the direction of Brittain. Bankers Trust became a leader in the nascent derivatives business under the management of
Charlie Sanford, who succeeded Alfred Brittain III, in the early 1990s. Having de-emphasized traditional loans in favor of trading, the bank became an acknowledged leader in risk management. Lacking the boardroom contacts of its larger rivals, notably
J. P. Morgan, BT attempted to make a virtue of necessity by specializing in trading and in product innovation. The company shied away from using market data distribution products from companies such as
Reuters, instead choosing to develop its own systems in-house. A small development team based in London created BIDDS (Broadgate Information Data Distribution System), which included the Montage front-end package that traders used to obtain data from data feeds and broker screens. In early 1994, despite all its prowess in managing the risks in the
trading room, the bank suffered irreparable reputational damage when some complex
derivative transactions caused large losses for major corporate clients. Two of these—
Gibson Greetings and
Procter & Gamble (P&G)—successfully sued BT, asserting that they had not been informed of, or (in the latter case) had been unable to understand, the risks involved. In 1995, the
Securities and Exchange Commission sanctioned Gibson Greetings for its handling of derivatives trading, and Bankers Trust settled the P&G case in May 1996.
1997 merger and 1998 sale In 1997, Bankers Trust acquired
Alex. Brown & Sons, founded in 1800 and a public corporation since 1986, in an attempt to grow its investment banking business. The bank suffered major losses during the
1998 Russian financial crisis since the bank had a large position in Russian government bonds. In late 1998, shortly before Bankers Trust was acquired by
Deutsche Bank, BT pleaded guilty to institutional fraud due to the failure of certain members of senior management to
escheat abandoned property to the State of New York and other states. Rather than turn over to the states' funds from dormant customer accounts and uncashed dividend and interest checks as required by law, some of the bank's senior executives credited this money as income and moved it to its operating account. Bruce J. Kingdon, the head of the bank's Corporate Trust and Agency group, spearheaded the fraud and (in 2001) entered into a guilty plea in the US District Court for the Southern District of New York and was sentenced to community service. The SEC subsequently barred some of his subordinates from working in the securities markets permanently. With the bank's guilty plea in the escheatment lawsuit and thereafter its status as a convicted felon, it became ineligible to transact business with most municipalities and many companies, which are prohibited from transacting business with felons. Consequently, the acquisition by Deutsche Bank significantly benefited the bank's shareholders, shielding them from losing their entire investment. In November 1998, Deutsche Bank agreed to purchase Bankers Trust for $10.1 billion;
Later sales In 1999, Deutsche Bank sold the Bankers Trust
Australian division to the
Principal Financial Group, who, in turn, sold the investment banking business to
Macquarie Group in June 1999 and the asset management division to
Westpac on October 31, 2002. This organisation now uses the name
BT Financial Group. Deutsche Bank announced on November 5, 2002, that it would sell the Trust and Custody division of Bankers Trust to
State Street Corporation. The sale finalized in February 2003. ==Controversies==