Bankers Trust New York Corporation
1994 Annual Report, “The Impact of Leadership”
I began my work with Bankers Trust in the midst of its derivatives scandal, as the company struggled to regain the confidence of investors, clients, and regulators. In a meeting with senior executives, I recommended a straightforward, no-frills approach to the annual report, so there would be nothing to obscure the message: Bankers Trust still works.
Cutting through traditional product and institutional boundaries
to operate at a deeper, more fundamental level,
Bankers Trust creates tailored solutions to
respond to our clients’ most critical needs and objectives
Letter to Shareholders
The competitively strong 1994 results of Bankers Trust New York Corporation and the outstanding performance of our over 14,000 employees worldwide were clouded somewhat by difficulties we experienced in one area of the business, leveraged derivatives.
A very few of our employees in the leveraged derivatives group did not abide by our standards. They have been disciplined. Regulators have sanctioned the Corporation—however, it is important to note that they have not restricted our business.
Bankers Trust’s rules are more exacting than any government regulations. They always have been. And because of the trust that our clients, employees and shareholders place in us, they should be. Just as we routinely exceed the capital reserves required of us by regulators, the standards of conduct we have developed in our more than 90-year history of service to clients are far more stringent than those required by law and we take those standards very seriously.
We remain committed to risk management as a cornerstone of our franchise. Especially in these difficult markets, corporations and investors need customized risk-management products, and it has been our ability to provide solutions of this kind that has won Bankers Trust a reputation as the most innovative firm—commercial or investment bank—in the industry.
We have taken several qualitative steps to build on this reputation: We have rededicated ourselves to openness. Our clients can count on us to set the industry’s highest standards of price transparency and disclosure relating to their derivatives contracts. And our shareholders can count on receiving more information from us, as well. In the Management’s Discussion & Analysis of this report, we have a new section on Risk Management that aims to clarify and quantify our risk positions. This discussion, together with a number of more technical changes to our disclosures, should provide readers with a clear presentation of how we manage our internal risk.
The difficulties we experienced last year have reinforced some valuable lessons for all of us at Bankers Trust—about the importance of building relationships, about who we are and how we want to do business. The many positive aspects of Bankers Trust’s performance in 1994 also provided important lessons…
|THE NEW YORK TIMES SAID…
“Bankers Trust ran into big trouble peddling derivatives last year, and Charles Sanford Jr., the bank’s chairman, angrily tackles the issue [in the annual report]. He places blame for the disaster on ‘a very few of our employees,’ he writes, people who ‘did not abide by our standards.’ But he will not paper over the problem, he promises. ‘We have rededicated ourselves to openness.’”
|—on Bankers Trust’s 1994 annual report, from “Annual Reports: Upfront and Unstarched”
by Patrice Duggan Samuels, The New York Times, April 9. 1995