<PAGE>   1





                      BANKERS TRUST NEW YORK CORPORATION
                                      
                          ANNUAL REPORT ON FORM 10-K
                                      
                 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995




Pages 1-31 represent portions of the 1995 Annual Report to Stockholders which
are not required by the Form 10-K report and are not "filed" as part of the
Form 10-K.

The Form 10-K cover page and cross reference index are on pages 107 and 108,
respectively.
<PAGE>   2
TABLE 1 FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
($ in millions, except per share data)                          1995      1994      1993      1992      1991
--------------------------------------------------------------------------------------------------------------
FOR THE YEAR
<S>                                                           <C>        <C>       <C>       <C>       <C>
  Net interest revenue (book basis)                           $    817   $ 1,172   $ 1,314   $ 1,147   $   737
  Noninterest revenue                                            2,423     2,473     3,364     2,331     2,522

  Income before cumulative effects of accounting changes      $    215   $   615   $ 1,070   $   639   $   667
  Cumulative effects of accounting changes                          --        --       (75)      446        --
--------------------------------------------------------------------------------------------------------------
  Net income                                                  $    215   $   615   $   995   $ 1,085   $   667
--------------------------------------------------------------------------------------------------------------
PER COMMON SHARE
  Primary Earnings Per Share
    Income before cumulative effects of accounting changes    $   2.03   $  7.17   $ 12.40   $  7.23   $  7.65
    Cumulative effects of accounting changes                        --        --      (.89)     5.30        --
--------------------------------------------------------------------------------------------------------------
  Net income                                                  $   2.03   $  7.17   $ 11.51   $ 12.53   $  7.65
--------------------------------------------------------------------------------------------------------------
  Fully Diluted Earnings Per Share
    Income before cumulative effects of accounting changes    $   2.02   $  7.17   $ 12.29   $  7.22   $  7.65
    Cumulative effects of accounting changes                        --        --      (.88)     5.29        --
--------------------------------------------------------------------------------------------------------------
  Net income                                                  $   2.02   $  7.17   $ 11.41   $ 12.51   $  7.65
--------------------------------------------------------------------------------------------------------------
  Cash dividends declared                                     $   4.00   $  3.70   $  3.24   $  2.88   $ 2.605
   --as a percentage of net income (1)                             198%       52%       26%       40%       34%
  Book value, end of year (2)                                    50.58     53.67     51.90     43.23     34.93
  Market price
    High                                                            72    84 5/8    83 1/2    70 1/8        68
    Low                                                         49 3/4    54 3/4    65 3/4        50    39 1/2
    End of year                                                 66 1/2    55 3/8    79 1/8    68 1/2    63 3/4
  Price/earnings ratio, end of year (1)                           32.8x      7.7x      6.4x      9.5x      8.3x
  Cash dividend yield, end of year                                 6.0%      7.2%      4.5%      4.6%      4.4%

AT YEAR END
  Total assets                                                $104,002   $97,016   $92,082   $72,886   $63,959
  Long-term debt                                                 9,294     6,455     5,597     3,992     3,081
  Preferred stock of subsidiary                                    250       250       250        --        --
  Preferred stock (Corporation)                                    865       395       250       500       500
  Common stockholders' equity                                    4,119     4,309     4,284     3,621     2,912
  Total stockholders' equity                                     4,984     4,704     4,534     4,121     3,412

PROFITABILITY RATIOS
  Return on average common stockholders' equity (1)               3.98%    13.48%    26.33%    19.52%    23.10%
  Return on average total stockholders' equity (1)                4.43%    12.97%    25.01%    17.65%    20.59%
  Return on average total assets (1)                               .20%      .59%     1.25%      .86%     1.09%

CAPITAL RATIOS
  Common stockholders' equity to total assets, end of year        3.96%     4.44%     4.65%     4.97%     4.55%
  Total stockholders' equity to total assets, end of year         4.79%     4.85%     4.92%     5.65%     5.33%
  Average total stockholders' equity to average total assets      4.42%     4.52%     4.91%     5.44%     5.29%
  Bankers Trust New York Corporation:
    Risk-Based Capital Ratios (1992 year-end guidelines)
        Tier 1 Capital (3)                                        8.51%     9.05%     8.50%     7.75%     6.11%
        Total Capital (3)                                        13.90%    14.77%    14.46%    13.64%    10.86%
    Leverage Ratio (3)                                            5.12%     5.26%     6.28%     6.05%     5.15%
  Bankers Trust Company:
    Risk-Based Capital Ratios (1992 year-end guidelines)
        Tier 1 Capital (3)                                        9.47%     9.92%     9.38%     7.99%     5.58%
        Total Capital (3)                                        12.78%    12.90%    12.96%    12.01%     9.07%
    Leverage Ratio (3)                                            5.14%     5.91%     6.01%     5.59%     4.41%

EMPLOYEES, AT DECEMBER 31
  In domestic offices                                            7,760     8,258     8,300     8,096     7,745
  In foreign offices                                             6,309     6,271     5,271     4,821     4,343
--------------------------------------------------------------------------------------------------------------
    Total                                                       14,069    14,529    13,571    12,917    12,088
--------------------------------------------------------------------------------------------------------------
<FN>
(1) These figures exclude the cumulative effects of accounting changes recorded in 1993 and 1992.
(2) This calculation includes the effect of the vested portion of common shares issuable under deferred stock
    awards.
(3) In accordance with regulatory guidelines the figures at December 31, 1995, 1994 and 1993, exclude any
    benefit from the adoption of SFAS 115. In addition, regulatory capital ratios at December 31, 1992 were
    not restated in connection with the adoption, retroactive to January 1, 1992, of SFAS 109.
</FN>
</TABLE>


32 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   3
FINANCIAL REVIEW
================================================================================

Management's discussion and analysis of Bankers Trust New York Corporation's
results of operations and financial condition appears on pages 33 through 59.
The discussion and analysis should be read in conjunction with the financial
statements and supplemental financial data, which begin on page 62.

RESULTS OF OPERATIONS

SUMMARY OF 1995 RESULTS

For the year 1995 Bankers Trust New York Corporation and subsidiaries (the
"Corporation", or the "Firm") earned $215 million, or $2.03 primary earnings per
share. For the year 1994, the Corporation earned $615 million, or $7.17 primary
earnings per share.

    The 1995 results reflected significant declines in trading and
trading-related net interest revenue from the results achieved in 1994, as well
as special charges related to restructuring and settlement of leveraged
derivative transaction-related matters.

BUSINESS FUNCTIONS

In addition to the reported income statement categories, the Corporation breaks
down and analyzes its businesses on the basis of five interrelated business
functions, which represent its core business activities. Their definitions and
respective shares of income before cumulative effects of accounting changes are
presented below:

    --Client Finance: Meeting the credit and capital needs of clients.
    --Client Advisory: Providing advice and structuring transactions designed to
      implement client financial strategies.
    --Client Financial Risk Management: Helping clients manage their financial
      exposure.
    --Client Transaction Processing: Providing operating and administrative
      services to clients.
    --Trading and Positioning: Proprietary activity involving securities,
      derivatives, currency, commodity and funding transactions, as well as
      positions assumed as part of client risk management activities.

    Because the Corporation's business is complex in nature and its operations
are highly integrated, it is impractical to segregate the respective
contributions of the business functions with precision. For example, the Client
Advisory function is difficult to split from the Client Finance function, since
most complex financings include both an element of advice and the arrangement of
credit for the client. Further, transactions undertaken for purposes of Client
Financial Risk Management may contain an element of Client Finance or Trading
and Positioning. Finally, the Trading and Positioning function serves as an
element of support for client-based activities. As a result, estimates and
subjective judgments have been made to apportion revenue and expenses among the
business functions. In addition, certain revenue and expenses have been
segregated and reported in other (unallocated) because, in the opinion of
management, they could not be reasonably allocated or because their attribution
to a particular function would be distortive. Despite these important
qualifications concerning the precision of the allocation of income before
cumulative effects of accounting changes among the functions, the Corporation
believes that the categories and the amounts presented help provide reasonable
insight into the sources of its income. Subject to the foregoing limitations,
estimates and assumptions, a discussion of significant factors affecting the
results is presented below.

BUSINESS FUNCTIONS PROFITABILITY

<TABLE>
<CAPTION>
(in millions) Year Ended December 31,              1995         1994       1993
--------------------------------------------------------------------------------
<S>                                               <C>           <C>       <C>
Client Finance                                    $ 141         $140      $   76
Client Advisory                                      67           87          63
Client Financial Risk Management                   (202)         259         336
Client Transaction Processing                        76           99          60
Trading and Positioning                             250           71         594
Other (unallocated)                                (117)         (41)        (59)
--------------------------------------------------------------------------------
Income Before Cumulative Effects                  $ 215         $615      $1,070
--------------------------------------------------------------------------------
</TABLE>

    Client Finance--Client Finance activities generate net interest revenue and
corporate finance fees from the following major products: debt and equity
underwriting, commercial paper, lending, loan syndication, leasing, structured
finance and private placements. Client Finance income in 1995 of $141 million
remained comparable with the prior year's results, as volumes and profitability
from loan syndications, private placements and underwritings continued to be
relatively consistent with those achieved in 1994. Credit costs also remained
comparable in relation to those in the prior year.

    Client Finance income in 1994 rose 84 percent, to $140 million, up from $76
million in 1993, mainly as a result of increased volumes of loan syndications
throughout the year and lower credit costs attributable to the continuing
improvement in the Corporation's loan portfolio.

    Client Advisory--Client Advisory activities include asset management, trust
advisory, mergers and acquisition, strategic risk management, insurance and
other specialized advisory services. These activities principally give rise to
fiduciary and funds management revenue, and fees and commissions. Client
Advisory income in 1995 declined 23 percent, to $67 million, down from $87
million in 1994. This decline was principally attributable to lower revenues
from mergers and acquisition and other advisory activities, and higher expenses
in the Firm's funds management activities.

    Client Advisory income rose to $87 million in 1994 from $63 million in 1993,
an increase of 38 percent. This increase was principally attributable to an
overall increase in assets under management at the Corporation's Australian
subsidiary, improved profitability in the insurance business conducted by the
Corporation's Chilean subsidiary, Consorcio Nacional de Seguros S.A., and higher
merger and acquisition fees. These positive factors in 1994 were somewhat offset
by lower levels of performance-based funds management fees.

    Client Financial Risk Management--Primary risk management products include
derivatives contracts related to interest rates, currencies, equities and
commodities (or indices thereof), and credit. These products generate both
trading and net interest revenue. Client Financial Risk Management posted a loss
of $202 million in


                          BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 33
<PAGE>   4
--------------------------------------------------------------------------------

1995, compared to income of $259 million in 1994. This decline was principally
attributable to losses sustained during the first quarter in connection with
Latin American derivatives positions, during which time these markets
experienced a lack of liquidity and extreme volatility. Also contributing to
this decline were lower average margins on risk management products throughout
the year, as a result of lower market demand for more complex transactions.
However, overall transaction volumes remained consistent with those seen in the
prior year.

    Client Financial Risk Management income fell 23 percent in 1994 to $259
million, from a record $336 million in 1993. Uncertain market conditions and an
overall slowdown in transaction volumes in the marketplace contributed to this
decline in profitability. In addition, $35 million of trading revenue related to
leveraged derivative transactions was not recognized due to credit concerns.

    Client Transaction Processing--This business function produces net interest
revenue, fiduciary and funds management revenue, and fees and commissions from
money transfer, securities custody and clearance, securities lending, and
retirement plan recordkeeping and administrative services. Client Transaction
Processing income in 1995 fell to $76 million, down from $99 million in 1994, a
decline of 23 percent. This is principally attributable to lower processing
volumes during the first half of the year, and higher costs during the first
quarter.

    In 1994, Client Transaction Processing income rose 65 percent, to $99
million, from $60 million in 1993. Key contributors to this increase were
improved money transfer volumes and increased participation in securitized trust
arrangements involving collateralized mortgages and other types of asset-backed
financings.

    Trading and Positioning--Trading and positioning activities involve U.S.
government and agency securities, foreign government securities, various
derivative positions (including those assumed on behalf of clients), currencies,
equities (including private equities which are generally held for the
intermediate- to long-term) and commodities. Trading and Positioning income of
$250 million in 1995 increased $179 million over the 1994 results of $71
million. This increase was largely attributable to net revenue from equity
investment transactions, including pre-tax gains totaling $207 million on the
sale of a substantial portion of the Corporation's investment in Northwest
Airlines Corporation.

    Trading and Positioning income in 1994 dropped 88 percent, to $71 million,
from the record $594 million in 1993 as a result of the persistently difficult
trading year.

    Other (Unallocated)--In 1995, 1994 and 1993 approximately $117 million, $41
million and $59 million, respectively, of corporate expenses were not allocated
or attributed to business functions. The corporate expenses in all years
included items such as premises costs for temporarily unoccupied space. In 1995,
these expenses also included a $50 million pre-tax severance-related charge
taken in the first quarter and $86 million of pre-tax charges taken in the
fourth quarter related to the settlement of leveraged derivative transactions
and related exceptional legal costs. In 1994, these expenses also included a
charge of $10 million with respect to a settlement with the Securities and
Exchange Commission and the Commodity Futures Trading Commission.

 Change in Functional Analysis

The Corporation is considering changes to this financial analysis to reflect
more closely its new organizational structure as described on page 102. These
changes will be disclosed in future quarterly filings.

FINANCIAL REPORTING MATTERS

On January 1, 1995, the Corporation adopted Statement of Financial Accounting
Standards ("SFAS") 114, "Accounting by Creditors for Impairment of a Loan" as
amended by SFAS 118, "Accounting by Creditors for Impairment of a Loan--Income
Recognition and Disclosures." SFAS 114 requires the creation of a valuation
allowance for impaired loans based on one of the following: the present value of
expected future cash flows discounted at the loan's effective interest rate, the
loan's observable market price or the fair value of the collateral if the loan
is collateral dependent. Under SFAS 114, a loan is impaired when, based on
current information and events, it is probable that a creditor will be unable to
collect all amounts due according to the loan's contractual terms. At December
31, 1995, adoption of this standard resulted in a $90 million allocation of the
existing allowance for credit losses to a specific valuation allowance for
impaired loans.

    During the fourth quarter of 1994, the Corporation adopted Financial
Accounting Standards Board ("FASB") Interpretation No. 41 ("FIN 41"),
"Offsetting of Amounts Related to Certain Repurchase and Reverse Repurchase
Agreements." FIN 41 allows the netting, under certain circumstances, of certain
repurchase and reverse repurchase agreements. It was the Corporation's former
policy to record such transactions on a gross basis on the balance sheet. As the
result of this adoption, at December 31, 1994, the Corporation's consolidated
total assets and total liabilities each decreased by approximately $500 million.

    On January 1, 1994, the Corporation adopted FASB Interpretation No. 39 ("FIN
39"), "Offsetting of Amounts Related to Certain Contracts." FIN 39 requires that
unrealized gains and losses on swaps, forwards, options and similar contracts be
recognized as assets and liabilities, except where such gains and losses arise
from contracts covered by qualifying master netting agreements. It was the
Corporation's former policy to record such unrealized gains and losses on a net
basis on the balance sheet. As the result of this adoption, at December 31, 1994
the Corporation's consolidated total assets and total liabilities each increased
by approximately $12 billion.


34 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   5
--------------------------------------------------------------------------------

    Effective December 31, 1993, the Corporation adopted SFAS 115, "Accounting
for Certain Investments in Debt and Equity Securities." This accounting standard
mandates that affected securities which are neither trading securities nor held
to maturity be designated as available for sale and reported at fair value, with
unrealized gains and losses recorded directly to a separate component of
stockholders' equity. At December 31, 1993, the Corporation recorded a credit of
$145 million ($88 million on an after-tax basis) in the securities valuation
allowance component of stockholders' equity, representing the net unrealized
gains on securities available for sale. The adoption of SFAS 115 had no effect
on net income.

    On January 1, 1993, the Corporation adopted SFAS 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions" and SFAS 112, "Employers'
Accounting for Postemployment Benefits." In adopting SFAS 106 and SFAS 112, the
Corporation recorded charges to earnings of $100 million and $7 million,
respectively, (or $70 million and $5 million, respectively, net of income taxes)
as the cumulative effects of these changes in accounting principles.

    As used throughout this Annual Report, the term "International" signifies
information based on the domicile of the customer, whereas the term "Foreign
Office" refers to the location in which the transaction is recorded.

STATEMENT OF INCOME ANALYSIS

NET INTEREST REVENUE

Net interest revenue for 1995 was $817 million, down $355 million, or 30
percent, from 1994. Net interest revenue of $1.172 billion in 1994 decreased by
$142 million, or 11 percent, from the amount earned in 1993.

    The $355 million decrease in net interest revenue during 1995 was due to a
$369 million, or 80 percent, decrease in trading-related net interest revenue,
which totaled $91 million for 1995.

    A significant portion of the Firm's trading and risk management activities
involve positions in interest rate instruments and related derivatives. The
revenue from these activities can periodically shift between trading and net
interest, depending on a variety of factors, including risk management
strategies. Therefore, the Corporation views trading revenue and trading-related
net interest revenue together, which is discussed in the trading revenue section
below.

    The Firm's non-trading-related net interest revenue, considered to be
historically a more stable component of overall net interest revenue, was $726
million in 1995, compared to $712 million in 1994.

    For the 1994 versus 1993 comparison, net interest revenue decreased by $142
million due to a $141 million, or 23 percent, decrease in trading-related net
interest revenue, which totaled $460 million for 1994. Total non-trading-related
net interest revenue was $712 million for 1994, virtually unchanged compared

TABLE 2 NET INTEREST REVENUE ANALYSIS

The table below presents the Corporation's trend of net interest revenue,
average balances and rates. For further details on these statistics, see pages
98 through 100.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
($ in millions) Year Ended December 31,                    1995         1994        1993
----------------------------------------------------------------------------------------
<S>                                                     <C>          <C>         <C>
Net interest revenue
Book basis                                              $   817      $ 1,172     $ 1,314
Tax equivalent adjustment*                                   41           83          82
----------------------------------------------------------------------------------------
Fully taxable basis                                     $   858      $ 1,255     $ 1,396
----------------------------------------------------------------------------------------
Average balances
Interest-earning assets                                 $82,078      $76,300     $76,798
Interest-bearing liabilities                             78,850       73,748      69,676
----------------------------------------------------------------------------------------
Earning assets financed by noninterest-bearing funds    $ 3,228      $ 2,552     $ 7,122
----------------------------------------------------------------------------------------
Average rates (fully taxable basis)
Yield on interest-earning assets                           7.22%        6.70%       5.88%
Cost of interest-bearing liabilities                       6.43         5.23        4.48
----------------------------------------------------------------------------------------
Interest rate spread                                        .79         1.47        1.40
Contribution of noninterest-bearing funds                   .26          .17         .42
----------------------------------------------------------------------------------------
Net interest margin                                        1.05%        1.64%       1.82%
----------------------------------------------------------------------------------------
<FN>
* The applicable combined federal, state and local incremental tax rate used to determine
  the amounts of the tax equivalent adjustments (which recognize the income tax savings
  on tax-exempt assets) was 42 percent for 1995, 1994 and 1993.
</FN>
</TABLE>


                          BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 35
<PAGE>   6
--------------------------------------------------------------------------------

to 1993. The average balances of non-trading-related interest-earning assets and
interest-bearing liabilities were virtually unchanged from 1993. The average
interest rate spread also remained relatively constant in 1994 versus 1993.

PROVISION FOR CREDIT LOSSES

The provision for credit losses amounted to $31 million for 1995, compared with
$25 million for 1994 and $93 million in 1993. A discussion of the Corporation's
summary of credit loss experience, including charge-off procedures and the
adequacy of the allowance for credit losses, appears on page 51.

TRADING REVENUE

The Corporation conducts its global trading of debt and equity securities, money
market instruments, derivative products and foreign exchange as an integrated
business because of the dynamic interplay between worldwide interest rates,
exchange rates and equity and commodity indices. Trading revenue is generated by
proprietary activities and client-related activities. Proprietary activities
include the trading of U.S. government and agency securities, foreign sovereign
securities, foreign exchange and currency options and commodities, as well as
the intermediate and longer-term proprietary trading of liquid securities,
foreign exchange and derivative products. The Firm also trades restructured
loans, bonds, equities and other instruments of Latin American and other
emerging markets issuers. Trading activities also encompass the Firm's dealer
business of providing risk management products for clients, including
derivatives such as swaps, options, forwards and other similar types of
contracts.

    Trading-related net interest revenue represents interest earned on cash
instruments held in the trading positions for either proprietary trading or risk
management purposes, less the cost to fund both cash and derivatives positions.

    For the year 1995, trading revenue was $341 million, down $124 million, or
27 percent, from the $465 million reported in 1994. The trading revenue in 1994
was down $1.166 billion from the results reported in 1993. Trading-related net
interest revenue decreased to $91 million, down $369 million, or 80 percent,
from $460 million reported in 1994. The trading-related net interest in 1994 was
down $141 million from 1993 results.

    The table below quantifies the Firm's trading revenue and trading-related
net interest revenue by major category of market risk. These categories are
based on management's view of the predominant underlying risk exposure of each
of the Firm's trading positions.

<TABLE>
<CAPTION>
                                                             Trading-
                                                             Related
                                                                 Net
                                                  Trading   Interest
(in millions)                                     Revenue    Revenue       Total
--------------------------------------------------------------------------------
<S>                                                <C>          <C>       <C>
Year Ended December 31, 1995
Interest rate risk                                 $   87       $156      $  243
Foreign exchange risk                                  36         --          36
Equity and commodity risk                             218        (65)        153
--------------------------------------------------------------------------------
Total                                              $  341       $ 91      $  432
--------------------------------------------------------------------------------
Year Ended December 31, 1994
Interest rate risk                                 $  278       $495      $  773
Foreign exchange risk                                 (54)        --         (54)
Equity and commodity risk                             241        (35)        206
--------------------------------------------------------------------------------
Total                                              $  465       $460      $  925
--------------------------------------------------------------------------------
Year Ended December 31, 1993
Interest rate risk                                 $1,066       $642      $1,708
Foreign exchange risk                                 191         --         191
Equity and commodity risk                             374        (41)        333
--------------------------------------------------------------------------------
Total                                              $1,631       $601      $2,232
--------------------------------------------------------------------------------
</TABLE>

Interest Rate Risk

As indicated above, a significant portion of the Firm's trading and risk
management activities involve positions in interest rate instruments and related
derivatives. The revenue from these activities can periodically shift between
trading and trading-related net interest revenue, depending on a variety of
factors, including risk management activities. The decrease in trading and
trading-related net interest revenue in this category was affected by the
general volatility in interest rates that occurred in the first quarter of 1995
coupled with unusual fluctuations and associated liquidity problems in the
emerging markets of Latin America. As a result, total trading revenue and
trading-related net interest revenue associated with interest rate positions
declined by 69 percent to $243 million in 1995.

    Total trading revenue and trading-related net interest revenue related to
interest rate risk positions fell over 50 percent to $773 million in 1994 from
$1.7 billion in 1993. This decrease was due primarily to the sharp, global
increase in interest rates that occurred during the first quarter of 1994, which
adversely affected the full range of the Firm's positions in these
interest-rate-sensitive instruments; those most significantly affected involved
European, Japanese and emerging market sovereign debt.

Foreign Exchange Risk

The Firm's trading and risk management strategies also involve positions in
foreign exchange and currency related derivatives such as swaps, options,
forwards and other similar types of contracts. The general decline in global
interest rates favorably impacted positions as trading revenue in this category
increased $90 million compared to 1994, due principally to a rebound in the
Firm's proprietary trading business.


36 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   7
--------------------------------------------------------------------------------

    Trading revenue related to foreign exchange risk resulted in a loss of $54
million in 1994, compared to a gain of $191 million in 1993. This decrease was
due to the global increase in interest rates that occurred during the first
quarter of 1994, which had a considerable effect on foreign currency prices,
adversely impacting positions.

Equity and Commodity Risk

The Firm's trading and risk management activities also include positions in
equity securities and commodities and related derivatives. Total trading and
trading-related net interest revenue decreased $53 million compared to 1994.
This decrease included a decline in equity-related derivative products which was
reflective of the lower average margin on derivative products as a whole. The
volatility in the Latin American markets that occurred in 1995 had a ripple
effect on equity prices which was also a factor in the overall performance in
this category.

    Total trading revenue and trading-related net interest revenue related to
equity and commodity risk was $206 million in 1994, down $127 million, or
approximately 40 percent, from the $333 million in 1993. The decline was
principally attributable to lower total trading revenue during 1994 from equity
securities positions in issuers from the emerging markets of Asia and Latin
America.

FIDUCIARY AND FUNDS MANAGEMENT REVENUE

Fiduciary and funds management revenue was $697 million in 1995, down $43
million, or 6 percent, from the record $740 million earned in 1994, which was
$37 million higher than the $703 million recorded in 1993.

    The decrease in 1995 was primarily due to a decline in transaction volumes
in global fiduciary services, as well as a decline in brokerage fee income at
the Corporation's Australian subsidiary as a result of lower fund growth as
compared to 1994. Partially offsetting these factors was an increase in
custodian fees due to a higher level of global custody assets under management.

    The increase in 1994 compared to 1993 was primarily due to a higher level of
assets under management, particularly in the global private banking activities
in Australia, as well as increased revenue from custodian and global fiduciary
services, offset in part by a decline in performance-based funds management
fees.

FEES AND COMMISSIONS

Fees and commissions totaled $712 million for 1995, which represented a decrease
of $44 million, or 6 percent, from the record $756 million earned in 1994.
Corporate finance fees decreased $33 million, or 8 percent, during 1995. Lower
revenue from securities underwriting and merger and acquisition fees were
partially offset by higher revenue from private placement fees.

    Fees and commissions totaled $756 million in 1994 which was $46 million
higher than the $710 million earned in 1993. Corporate finance fees increased
$24 million, or 6 percent, during 1994 to their highest level in five years.
This increase was due to higher revenue from loan syndication fees, offset in
part by lower fees from securities underwriting and leasing syndication fees.

SECURITIES AVAILABLE FOR SALE GAINS

Securities available for sale gains totaled $180 million for 1995, an increase
of $108 million from the $72 million earned in 1994.

    The 1995 results included a $145 million pre-tax gain on the sale of most of
the Corporation's merchant banking investment in Northwest Airlines Corporation.

    The gain on the sale of the portion of the Corporation's investment in
Northwest Airlines Corporation that had not been classified as available for
sale was recorded in other noninterest revenue as discussed below.

OTHER NONINTEREST REVENUE

Other noninterest revenue totaled $493 million for 1995, an increase of $53
million, or 12 percent, from 1994. The largest factor of this increase was
higher insurance premium revenue from the Corporation's Chilean subsidiaries
primarily as a result of an increase in its annuity business. Also contributing
to the year-to-year increase in other noninterest revenue was an increase in net
gains from equity investments as 1995 included a $62 million gain on sale of a
portion of the Corporation's merchant banking investment in Northwest Airlines
Corporation. Partially offsetting these factors was a lower level of equity
income from affiliates.

    Other noninterest revenue totaled $440 million for 1994, an increase of $133
million, or 43 percent, from 1993. This increase was due to several factors,
including a $59 million increase in insurance premium revenue, a lower level of
losses from the revaluation of non-trading foreign currency investments, the
impact of an insurance settlement related to the January 1993 fire at the
Corporation's headquarters at 280 Park Avenue and unrealized gains related to
certain venture capital assets. These results were offset in part by charges
related to the funds management business.


                          BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 37
<PAGE>   8
--------------------------------------------------------------------------------

NONINTEREST EXPENSES

In response to the lower revenue and reduced market activity in certain
businesses, management, as previously announced, implemented expense reduction
programs over the course of 1995. These programs have achieved reductions in
base operating expenses (principally, noninterest expenses before bonus,
policyholder benefits, minority interest and exceptional legal costs related to
leveraged derivative transactions) of $200 million in 1995 as compared to the
annualized fourth quarter 1994 levels.

    In order to accomplish these expense reductions, it was anticipated that
total staffing would be reduced by approximately 1,400, comprised of 1,000
regular staff and 400 temporary employees. In order to provide for an
appropriate cost of severance, the Corporation recorded a provision for
severance-related costs of $50 million, pre-tax, in the first quarter of 1995.

    While the targeted staff reductions were achieved as of December 31, 1995,
the expansion of certain key businesses necessitated the hiring of additional
staff. The number of full time staff at December 31, 1995 was 14,069, a net
decrease of 460 from December 31, 1994.

    Although the savings achieved from the expense reduction programs will
continue into 1996, their impact will be offset by decisions made as part of the
Corporation's planning process at the end of 1995 to expand a number of key
businesses and to make selected investments in areas that are showing profitable
growth.

    Total noninterest expenses were $2.898 billion for 1995, an increase of $147
million, or 5 percent, from the $2.751 billion recorded in 1994. Excluding the
provision for severance-related costs of $50 million, noninterest expenses were
$2.848 billion, an increase of $97 million, or 4 percent, from 1994. Incentive
compensation and employee benefits expense decreased $84 million, or 12 percent,
due to lower bonus expense reflecting the reduced earnings. Salaries expense
increased $30 million, or 4 percent, in 1995.

    All other noninterest expenses, excluding the provision for
severance-related costs, totaled $1.404 billion for 1995, which was $151
million, or 12 percent, higher than in 1994. This increase was primarily due to
an increase in the provision for policyholder benefits as well as an increase in
professional fees, which included exceptional legal costs related to leveraged
derivative transactions.

    Total noninterest expenses were $2.751 billion for 1994, a decrease of $284
million, or 9 percent, from the $3.035 billion recorded in 1993. Incentive
compensation and employee benefits expense decreased $448 million, or 38
percent, primarily due to lower bonus expense reflecting the reduced earnings.
Salaries expense increased $87 million, or 13 percent, in 1994. The average
number of employees increased by 5 percent from 1993, to 14,005.

    All other noninterest expenses totaled $1.253 billion for 1994, up $77
million, or 7 percent, from 1993. Increases in the provision for policyholder
benefits, service bureaus, agency personnel fees and minority interest were
offset in part by a decrease in other real estate expenses, primarily resulting
from a gain on the sale of a foreclosed property as well as a lower level of
contribution expenses.

INCOME TAXES

Income tax expense for 1995 amounted to $96 million, compared with $254 million
for 1994. The effective tax rate for 1995 was 31 percent, while the 1994
effective tax rate was 29 percent.

    The effective tax rate for 1993 was 31 percent, the calculation of which
excluded the income taxes associated with the reported cumulative effects of
accounting changes for SFAS 106 and SFAS 112.


38 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   9
--------------------------------------------------------------------------------

INTERNATIONAL OPERATIONS

International operations have made a significant contribution to consolidated
results, consistent with the emphasis the Corporation has placed on foreign
markets. The Corporation's assets and summarized results of operations for 1995,
1994 and 1993 have been segregated between domestic and international operations
in Note 21 of Notes to Financial Statements. This analysis, which is based on
the domicile of the customer, incorporates numerous subjective assumptions.

    International net income totaled $67 million for 1995, compared with $368
million for 1994. International operations contributed 31 percent and 60 percent
of the Corporation's net income in 1995 and 1994, respectively.

    The decrease in 1995 international net income, as compared to 1994, was
primarily due to a decline in income for the Corporation as a whole. The
decrease in international operations' income in proportion to domestic income
(31 percent in 1995 as compared to 60 percent in 1994) is primarily due to
trading losses incurred in the United Kingdom and Australia/New Zealand. The
United Kingdom had a net loss (after Corporate expense allocations) of $134
million, a decrease of $239 million, which was caused by trading losses from
Latin American products. The decrease in net income for Australia/New Zealand
(to $47 million from $151 million) was primarily due to first quarter trading
losses and an overall increase in other expenses.

    Domestic net income decreased by $99 million, to $148 million in 1995 due to
a decline in interest earned caused by a reduction in interest-bearing trading
assets, decreases in fees and commissions and increases in interest expense and
other noninterest expense.

    International total assets were $51.5 billion at December 31, 1995, compared
with $36.1 billion at December 31, 1994 and represented 50 percent and 37
percent of total consolidated assets, respectively. The $15.4 billion increase
was primarily due to an increase in United Kingdom assets of $3.2 billion, an
increase in Western Hemisphere assets of $1.5 billion and a decrease in
intersegment activity of $10 billion. Assets for both regions rose due to
increases in trading assets. Domestic total assets decreased $8.4 billion to
$52.5 billion primarily due to reductions in federal funds sold, domestic
trading assets and intersegment balances. These decreases were partially offset
by an increase in securities sold under repurchase agreements.

    International net income totaled $368 million for 1994, compared with $865
million for 1993. International operations contributed 60 percent and 87 percent
of the Corporation's net income in 1994 and 1993, respectively. The decrease in
1994 international net income as compared to 1993 was primarily due to reduced
net income in the United Kingdom and Asia. United Kingdom's net income decreased
by $366 million in 1994, as trading revenue decreased significantly. Asia net
income decreased by $143 million primarily due to lower trading revenue in Hong
Kong, Singapore, and Tokyo and an increase in noninterest expenses.

    Domestic net income increased by $117 million to $247 million in 1994,
primarily due to higher fees and commissions, decreases in the provision for
credit losses and noninterest expenses, partially offset by lower trading
revenue.

    International total assets were $36.1 billion at December 31, 1994, compared
with $35.4 billion at December 31, 1993, which represented 37 percent and 38
percent of total consolidated assets, respectively. The regional changes
primarily consisted of an increase in United Kingdom assets of $10.9 billion and
an increase in Australia/New Zealand assets of $2.4 billion, and a $5.6 billion
decrease in Europe assets. United Kingdom assets increased primarily due to an
increase in trading assets, federal funds sold and securities purchased under
resale agreements. Australia/New Zealand assets increased primarily due to an
increase in trading assets. Europe assets decreased primarily due to a decrease
in trading assets. Domestic total assets increased $4.2 billion to $60.9 billion
primarily due to an increase in federal funds sold and securities purchased
under resale agreements, partially offset by a decrease in net loans and lease
financing.


                          BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 39
<PAGE>   10
--------------------------------------------------------------------------------
CHANGES IN FINANCIAL CONDITION

BALANCE SHEET ANALYSIS

Table 3 below highlights the trends in the balance sheet over the past two
years. Because annual averages may tend to conceal trends and year-end balances
can be distorted by one-day fluctuations, fourth quarter averages for each year
are provided to give a better indication of trends in the balance sheet.


TABLE 3 CONDENSED BALANCE SHEETS--FOURTH QUARTER AVERAGES

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
(in millions)                                           1995        1994         1993
-------------------------------------------------------------------------------------
<S>                                                 <C>         <C>          <C>
ASSETS
  Interest-earning
   Interest-bearing deposits with banks             $  3,624    $  2,139     $  2,042
   Federal funds sold                                  2,387       1,497          488
   Securities purchased under resale agreements       19,126      14,380        8,791
   Securities borrowed                                 9,858       6,494        2,343
   Trading assets                                     31,926      33,106       41,942
   Securities available for sale
     Taxable                                           5,206       5,240           --
     Exempt from federal income taxes                  1,365       2,238           --
-------------------------------------------------------------------------------------
       Total securities available for sale             6,571       7,478           --
   Investment securities
     Taxable                                              --          --        5,541
     Exempt from federal income taxes                     --          --        1,030
-------------------------------------------------------------------------------------
       Total investment securities                        --          --        6,571
   Loans
     In domestic offices                               7,199       6,750        8,446
     In foreign offices                                5,624       5,798        5,765
-------------------------------------------------------------------------------------
       Total loans                                    12,823      12,548       14,211
-------------------------------------------------------------------------------------
     Total interest-earning assets                    86,315      77,642       76,388
  Noninterest-earning
   Cash and due from banks                             1,972       1,835        1,971
   Noninterest-earning trading assets                 17,858      19,778        3,772
   All other assets                                    9,736       8,081        6,528
   Allowance for credit losses                        (1,028)     (1,327)      (1,494)
-------------------------------------------------------------------------------------
Total                                               $114,853    $106,009     $ 87,165
-------------------------------------------------------------------------------------
LIABILITIES
  Interest-bearing
   Interest-bearing deposits
     In domestic offices                            $  5,788    $  5,584     $  8,511
     In foreign offices                               18,404      15,611       12,410
-------------------------------------------------------------------------------------
       Total interest-bearing deposits                24,192      21,195       20,921
   Trading liabilities                                12,599       8,856        7,430
   Securities sold under repurchase agreements        22,680      20,833       21,671
   Other short-term borrowings                        15,960      18,327       14,504
   Long-term debt                                      8,904       6,310        5,450
-------------------------------------------------------------------------------------
     Total interest-bearing liabilities               84,335      75,521       69,976
  Noninterest-bearing
   Noninterest-bearing deposits                        3,606       3,728        3,932
   Noninterest-bearing trading liabilities            15,392      15,539        1,694
   All other liabilities                               6,240       6,212        6,883
-------------------------------------------------------------------------------------
     Total Liabilities                               109,573     101,000       82,485
PREFERRED STOCK OF SUBSIDIARY                            250         250          250
-------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
   Preferred stock                                       865         395          250
   Common stockholders' equity                         4,165       4,364        4,180
-------------------------------------------------------------------------------------
Total Stockholders' Equity                             5,030       4,759        4,430
-------------------------------------------------------------------------------------
Total                                               $114,853    $106,009     $ 87,165
-------------------------------------------------------------------------------------
<FN>
The condensed average balance sheets are presented on a slightly different basis than
the balance sheets presented in the Financial Statements section of this report, in
that the various categories of interest-earning assets and interest-bearing
liabilities exclude certain noninterest-earning/bearing components included in the
balance sheet captions. These components, excluding noninterest-earning/bearing
trading assets/liabilities, are included in "all other assets" and "all other
liabilities" in the condensed average balance sheets.
</FN>
</TABLE>


40 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   11
--------------------------------------------------------------------------------

LIQUIDITY AND CAPITAL RESOURCES

Management believes that the Corporation has sufficient resources to meet the
present and foreseeable needs of its business operations for liquidity and
capital resources, which are discussed separately below.

Liquidity

Liquidity is the ability to have the funds available at all times to meet the
commitments of the Corporation. The Corporation has a formal process for
managing liquidity on a global basis for the Firm as a whole as well as for each
of its significant subsidiaries. Management's guiding policy is to maintain
conservative levels of liquidity designed to ensure that the Firm has the
ability to meet its obligations under all conceivable circumstances. Management
maintains a dual focus to ensure a conservative liquidity position by promoting
asset liquidity and actively managing liability/capital levels, maturities and
diversification. The fundamental objective in this regard is to ensure that,
even in the event of a complete loss of access to the liability markets, the
Corporation will be able to continue to fund those assets that cannot be
liquidated in a timely manner.

    The Corporation has a strong global funding presence. The Corporation
maintains a centralized funding organizational unit while retaining a funding
presence in local markets globally. A consolidated funding function provides for
central coordination and control of pricing and global information and strategy,
while the proximity to local markets allows for greater customer diversity and
the flexibility to respond quickly to market opportunities.

    In addition, the Corporation assesses its liquidity profile, such as asset
marketability, asset-to-liability repayment/maturity characteristics and funding
diversification, under various stress scenarios. Management believes that the
Corporation has the ability to withstand severe and prolonged liquidity shocks,
both systemic and institution-specific.

    Most of the Corporation's assets are highly liquid and of high credit
quality. The Corporation maintains excess liquidity through its base of liquid
assets. Liquid assets consist of cash and due from banks, interest-bearing
deposits with banks, federal funds sold, securities purchased under resale
agreements, securities borrowed, trading assets, and securities available for
sale. Securities purchased under resale agreements and securities borrowed are
virtually all short-term in nature and are collateralized with U.S. government
or other marketable securities, or cash equivalents. Trading assets are marked
to market daily and primarily consist of U.S. government and agency securities,
state and municipal securities, foreign government obligations, and money market
instruments. The Corporation's liquid assets amounted to $83.5 billion as of
December 31, 1995, and $79.0 billion as of December 31, 1994, both of which
equaled 80 percent of gross total assets.

    The Corporation continues to focus on extending and diversifying its funding
base by geography, investor segment, legal vehicle issuer, and type of
instrument. This is done by strengthening secured funding capabilities and
issuing a substantial amount of long-term debt and preferred stock in various
markets. The Corporation places particular emphasis on a large and diverse base
of stable customer deposits, which are generated incidentally from other
transactions or services provided in its Client Transaction Processing business.
Also, the Corporation has a relatively high proportion of active unsecured
funding which is provided by capital and long-term debt. The Corporation's total
stockholders' equity and long-term debt, taken together, have increased by 41
percent since the end of 1993.

    One of the Corporation's principal sources of day-to-day funding is provided
by securities sold under repurchase agreements, generally involving U.S.
government and agency securities and other OECD sovereign bonds. Short-term
financing is also available to the Corporation under various commercial paper
programs. The Corporation maintains its own funding team and sales force which
obtains directly from investors the majority of its purchased funds. This
enables the Corporation to develop and maintain ongoing relationships with a
diverse group of investors. The Corporation had available $500 million of unused
committed bank lines at December 31, 1995, which could be used as back-up
facilities for the Parent Company's commercial paper program or for general
purposes. The remainder of the Corporation's short-term borrowings and its
deposits are provided by a broadly diversified investor/depositor base in
various markets throughout the world.

    The Corporation's consolidated long-term debt at December 31, 1995 totaled
$9.3 billion, substantially all of which was unsecured, and consisted of $6.1
billion in senior borrowings and $3.2 billion of subordinated debt, issued
principally by the Parent Company and Bankers Trust Company ("BTCo"), the
Corporation's principal banking subsidiary. These borrowings mature between 1996
and 2033, as detailed in Note 9 of Notes to Financial Statements.

    The following information should be read in conjunction with the
consolidated statement of cash flows, which appears on page 65.

    Cash and due from banks increased $352 million as the net cash provided by
operating activities and financing activities exceeded the net cash used in
investing activities. The $3.5 billion of net cash provided by operating
activities primarily resulted from a $3.4 billion net change in trading assets
and liabilities, and receivables and payables from securities transactions.
Within investing activities, cash outflows from securities purchased under
resale agreements ($8.0 billion) and purchases of securities available for sale
($4.2 billion), were offset in part by cash inflows from sales, maturities and
other redemptions of securities available for sale ($5.7 billion), federal funds
sold ($1.7 billion) and interest-bearing deposits with banks ($1.2 billion).
Within financing activities, cash inflows from the issuances of long-term debt
($4.7 billion) were partially offset by cash outflows from other short-term
borrowings ($2.3 billion) and repayments of long-term debt ($1.6 billion).

    For the year ended December 31, 1994, cash and due from banks increased $235
million, as the net cash provided by operating activities exceeded the net cash
used in investing and financing activities. The $12.2 billion of net cash
provided by operating activities primarily resulted from a $12.2 billion net
change in trading assets and liabilities. Within investing activities, cash
outflows from purchases of securities available for sale ($5.8 billion),
increases in securities


                          BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 41
<PAGE>   12
--------------------------------------------------------------------------------

borrowed ($3.3 billion), federal funds sold ($2.2 billion) and interest-bearing
deposits with banks ($1.8 billion), were partially offset by cash inflows from
sales, maturities and other redemptions of securities available for sale ($5.1
billion) and a decrease in loans ($3.2 billion). Within financing activities,
cash outflows from a net change in securities sold under repurchase agreements
($8.3 billion) and repayments of long-term debt ($1.6 billion) were offset in
part by issuances of long-term debt ($2.4 billion) and an increase in deposits
($1.4 billion).

Capital Resources

The Corporation pursues capital management with the objective of enhancing its
ability to execute its global strategic business plans while retaining financial
flexibility. Management believes that a strong capital base is critical to
achieving these objectives.

    Combined total stockholders' equity and preferred stock of subsidiary
totaled $5.234 billion on December 31, 1995, up $280 million, or 6 percent, from
year end 1994, which was up $170 million, or 4 percent, from year end 1993. The
increase in 1995 was primarily due to the issuance of preferred stock and to net
income, partially offset by $361 million of dividends declared on common and
preferred stock. The increase in 1994 was due primarily to net income and the
net issuance of preferred stock, partially offset by $319 million of dividends
declared.

    The Corporation's primary measure of capital strength is the RAROC(TM)
framework (see page 46 for further discussion), which quantifies and assigns
capital to business activities based upon their credit, interest rate, foreign
currency, equity, commodity, liquidity and operating risks. Changes in the
Corporation's global balance sheet are monitored centrally on a regular basis.
In addition, the Corporation actively monitors compliance with bank regulatory
capital requirements, focusing primarily on the risk-based capital guidelines.
The Corporation manages its capital base and on- and off-balance sheet items to
ensure that it remains strongly capitalized.

    The Federal Reserve Board's risk-based capital guidelines addressing the
capital adequacy of bank holding companies and banks (collectively, "banking
organizations") include a definition of capital and a framework for calculating
risk-weighted assets by assigning assets and off-balance sheet items to broad
risk categories, as well as minimum ratios to be maintained by banking
organizations. A banking organization's risk-based capital ratios are calculated
by dividing its qualifying capital by its risk-weighted assets.

    Under the risk-based capital guidelines, there are two categories of
capital: core capital ("Tier 1") and supplemental capital ("Tier 2"),
collectively referred to as Total Capital. Tier 1 Capital includes common
stockholders' equity, qualifying perpetual preferred stock and minority interest
in equity accounts of consolidated subsidiaries. Tier 2 Capital includes
perpetual preferred stock (to the extent ineligible for Tier 1), hybrid capital
instruments (i.e., perpetual debt and mandatory convertible securities) and
limited amounts of subordinated debt, intermediate-term preferred stock and a
portion of the allowance for credit losses.

    The Federal Reserve Board's leverage constraint guidelines establish a
minimum ratio of Tier 1 Capital to adjusted quarterly average total assets
("Leverage Ratio").

    In accordance with Federal Reserve Board guidelines, the stockholder's
equity ($376 million at December 31, 1995 and $426 million at December 31, 1994)
and risk assets of BT Securities Corporation are excluded from the calculation
of the regulatory capital ratios. In computing these ratios, 50 percent of BT
Securities stockholder's equity is deducted from the Corporation's Tier 1
Capital, and 50 percent is deducted from Tier 2 Capital. Similar treatment is
accorded the stockholder's equity and risk assets of certain foreign insurance
subsidiaries of the Corporation.

    The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
established five capital tiers for banks. Pursuant to that statute, the federal
bank regulatory agencies have defined the five capital tiers for banks. Under
these regulations, a bank is defined to be well capitalized, the highest tier,
if it maintains a Tier 1 Capital ratio of at least 6 percent, a Total Capital
ratio of at least 10 percent and a Leverage Ratio of at least 5 percent.

    Based on their respective regulatory capital ratios at December 31, 1995,
both BTCo and Bankers Trust (Delaware) are well capitalized, following the
definitions in the regulations issued by the Federal Reserve Board and the other
federal bank regulatory agencies setting forth the general capital requirements
mandated by FDICIA.

    All three regulatory capital ratios, at both December 31, 1995 and 1994,
excluded any benefit from the adoption of SFAS 115.

    During 1995, each of the Corporation's three regulatory capital ratios
declined. The Tier 1 Capital and Total Capital ratios declined by 54 basis
points and 87 basis points, respectively, as the net increase in capital was
more than offset by the increase in total risk-weighted assets. The
Corporation's total risk-weighted assets at December 31, 1995 were $4.736
billion higher than at year end 1994. The Leverage Ratio decreased by 14 basis
points as a result of a 6 percent increase in adjusted quarterly average total
assets. The $140 million increase in Tier 1 Capital was primarily attributable
to the issuance of preferred stock.

    BTCo's three regulatory capital ratios declined during 1995. The Tier 1
Capital and Total Capital ratios declined by 45 basis points and 12 basis
points, respectively. The Leverage Ratio decreased by 77 basis points. Total
risk-weighted assets at December 31, 1995 were $3.413 billion higher than at
year end 1994. Adjusted quarterly average total assets at December 31, 1995 were
18 percent higher than at year end 1994. The increase in assets was partially
offset by the $383 million increase in Total Capital. Tier 1 Capital increased
by $131 million due primarily to the issuance of preferred stock. The increase
in Tier 2 Capital resulted primarily from an increase in qualifying subordinated
debt.

    Table 4 indicates the regulatory capital ratios of the Corporation and BTCo
at December 31, 1995 and 1994 and the minimum regulatory guidelines.


42 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   13
--------------------------------------------------------------------------------

TABLE 4 REGULATORY CAPITAL RATIOS

<TABLE>
<CAPTION>
                                                                             FRB
                                                                         Minimum
                                   December 31,     December 31,      Regulatory
                                           1995             1994      Guidelines
--------------------------------------------------------------------------------
<S>                                <C>              <C>               <C>
Corporation
Risk-Based Ratios
  Tier 1 Capital                           8.51%            9.05%            4.0%
  Total Capital                           13.90%           14.77%            8.0%
Leverage Ratio                             5.12%            5.26%            3.0%

BTCo
Risk-Based Ratios
  Tier 1 Capital                           9.47%            9.92%            4.0%
  Total Capital                           12.78%           12.90%            8.0%
Leverage Ratio                             5.14%            5.91%            3.0%
</TABLE>

    The following were the essential components of the Corporation's and BTCo's
risk-based capital ratios at the end of the two most recent years:

<TABLE>
<CAPTION>
(in millions) December 31,                                     1995         1994
--------------------------------------------------------------------------------
<S>                                                         <C>          <C>
Corporation
Tier 1 Capital                                              $ 4,512      $ 4,372
Tier 2 Capital                                                2,858        2,760
--------------------------------------------------------------------------------
Total Capital                                               $ 7,370      $ 7,132
--------------------------------------------------------------------------------
Total risk-weighted assets                                  $53,021      $48,285
--------------------------------------------------------------------------------

BTCo
Tier 1 Capital                                              $ 4,394      $ 4,263
Tier 2 Capital                                                1,532        1,280
--------------------------------------------------------------------------------
Total Capital                                               $ 5,926      $ 5,543
--------------------------------------------------------------------------------
Total risk-weighted assets                                  $46,389      $42,976
--------------------------------------------------------------------------------
</TABLE>

   TABLE 5 RISK-WEIGHTED ASSETS

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
(in billions) December 31,                                                             1995                 1994
-----------------------------------------------------------------------------------------------------------------------
                                                                                Balance              Balance
                                                                                 sheet/      Risk-    sheet/      Risk-
                                                                               notional   weighted  notional   weighted
                                                                                 amount    amounts    amount    amounts
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>        <C>       <C>        <C>
ASSETS
Cash and due from banks and interest-bearing deposits with banks               $    4.4      $  .7  $    5.4      $  .9
Federal funds sold and securities purchased under resale agreements                18.8        2.0      12.5        2.5
Securities borrowed                                                                 6.2        2.9       6.2        2.5
Trading assets                                                                     47.9       15.9      47.5       11.2
Securities available for sale                                                       6.3        4.6       7.5        4.4
Loans                                                                              12.6       11.0      12.5       10.0
Allowance for credit losses                                                        (1.0)        --      (1.3)        --
All other assets                                                                    8.8        4.9       6.7        4.5
-----------------------------------------------------------------------------------------------------------------------
Total assets                                                                      104.0       42.0      97.0       36.0
Less: applicable assets of BT Securities Corporation (1)                           18.7        4.3      15.7        1.8
-----------------------------------------------------------------------------------------------------------------------
ASSETS                                                                         $   85.3      $37.7  $   81.3      $34.2
-----------------------------------------------------------------------------------------------------------------------
OFF-BALANCE SHEET EXPOSURES
Derivatives                                                                    $1,767.0      $ 7.4  $1,981.7      $ 8.1
Credit-related arrangements                                                        13.9        7.0      13.2        5.6
Securities lending indemnifications                                                29.0         .9      21.0         .3
When-issued securities and other                                                   10.2         .3      10.0         .5
-----------------------------------------------------------------------------------------------------------------------
Total off-balance sheet exposures                                               1,820.1       15.6   2,025.9       14.5
Less: applicable off-balance sheet exposures of BT Securities Corporation (1)       2.2         --     (87.2)       (.2)
-----------------------------------------------------------------------------------------------------------------------
OFF-BALANCE SHEET EXPOSURES                                                    $1,817.9       15.6  $2,113.1       14.7
-----------------------------------------------------------------------------------------------------------------------
Less: allowance for credit losses limitation adjustment                                         .3                   .6
-----------------------------------------------------------------------------------------------------------------------
TOTAL RISK-WEIGHTED ASSETS                                                                   $53.0                $48.3
-----------------------------------------------------------------------------------------------------------------------
<FN>
(1) As well as certain foreign insurance subsidiaries
</FN>
</TABLE>



                          BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 43
<PAGE>   14
--------------------------------------------------------------------------------

RISK MANAGEMENT

Risk management is a core competency from which the Corporation derives many of
its competitive advantages. The ability to measure and manage risk is a prime
concern in all of the Corporation's business decisions, and sensitivity to
risk-management innovations and issues is an integral part of its culture. Four
overarching principles guide the Corporation's management of risk:

    - a firm-wide commitment to effective risk management starts at the
      senior-management level;
    - a strong, centralized and independent control function for risk management
      operating in conjunction with decentralized business activities enables
      the Corporation to be agile and efficient in its business activities yet
      prudent in its overall risk-taking;
    - diversification is an efficient mechanism for managing risk;
    - returns earned must be commensurate with the marginal risk associated with
      each business activity.

    The Corporation has made substantial investments in both information
technology and human capital to support its risk management processes.
Proprietary systems allow a team of dedicated risk management professionals to
track the Corporation's global portfolio from its offices worldwide. This team
of risk management professionals is independent of the Corporation's business
lines and reports directly to senior management.

Market Risk

Each day the Corporation's risk management process assembles position and risk
information on financial instruments of the Firm whose economic (fair) value is
a function of market-determined variables: interest rates, currency exchange
rates, equity prices, and commodity prices. This information is consolidated
into daily risk and limits reports for the Corporation and business lines. These
reports are reviewed by the Corporation's senior risk-managers and provide them
with a consistent set of information upon which to base their business
judgments.

    One summary measure of market risk that is produced by this process is Daily
Price Volatility. The Daily Price Volatility of a portfolio is the potential
loss in fair value that would be exceeded less than 1 percent of the time if
that portfolio were held unchanged for one day. The Daily Price Volatility
information in the tables and diagrams reported below reflect the market risk
for virtually all of the Corporation's financial assets and liabilities
irrespective of accounting classification. The positions captured by the Daily
Price Volatility include both derivative and cash positions which are reported
as trading assets and liabilities, repurchase and resale agreements, funding
assets and liabilities, deposits, assets held for sale and end-user derivatives.
The Daily Price Volatility is based upon proprietary simulation and risk
modeling techniques and incorporates the nonlinear payoffs, or convexity, and
the volatility risk stemming from options in the Corporation's portfolio.

    Figure 1 shows the frequency distribution of Daily Price Volatility for 1995
business days for the overall Corporation. The diagram illustrates that the
Daily Price Volatility for the Corporation overall was approximately uniformly
distributed between $20 million and $40 million during 1995. The magnitude and
variation in the Corporation's market risk were driven largely by the
Corporation's Trading and Positioning activities. These positions are
discretionary exposures undertaken by the Corporation and reflect changes in the
Corporation's trading and positioning as market conditions and opportunities
vary.

FIGURE 1
1995 BTNY DPV FREQUENCY DISTRIBUTION

    The Figure displays a histogram. Daily price volatility (DPV) amounts
ranging from $19 million to $44 million appear on the horizontal axis and
Frequency amounts ranging from 0 to 25 observations are displayed on the
vertical axis. The frequencies approximate a uniform distribution for DPV's
between $20 million and $40 million. If the distribution were exactly uniformly
distributed, the frequency would be about 12 at each DPV amount. In the
diagram, the frequency exceeds 12 in two ranges: it equals about 22 between
DPV's of $22 million and $25 million, and it equals about 16 observations for
DPV's of $38 million and $39 million. In the middle of the range (i.e., between
DPV's of $26 million and $37 million), there is an oscillating pattern above
and below a frequency of 10 observations, with an average of approximately 10
observations. The frequencies are much lower (approximately 2 or 3) for DPV's
of $19 million, $43 million and $44 million.


44 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   15
--------------------------------------------------------------------------------

    Table 6 shows the sensitivity of the Corporation's market-risk profile by
risk class in 1995 and 1994. The Corporation's portfolio, on average, in 1995
was most sensitive to changes in interest rates and equity prices. Note that the
impact of diversification across all risk classes reduced total risk by $16
million on average in 1995. As this illustrates, diversification is an effective
method for managing risk. The risk-reducing effect of diversification has been
recognized by the Bank for International Settlements in its recent proposal for
measuring the market risk of the trading accounts of financial institutions.

    Table 6 also shows that in 1995 the Corporation reduced both the average
level and the variability of market risk from 1994. The reduction in variability
is illustrated by the substantial decrease in the range between the minimum and
maximum values of the Daily Price Volatility across these years.


TABLE 6 BTNY DAILY PRICE VOLATILITY STATISTICS

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                   1995         1995        1995    December 31,
Market Risk (in millions)       Average      Minimum     Maximum            1995
--------------------------------------------------------------------------------
<S>                             <C>          <C>         <C>        <C>
Interest rate                      $ 20          $12         $32            $ 24
Currency                             10            5          26              10
Equity                               13            7          21              17
Commodity                             3            1           5               4
Diversification                     (16)          --          --             (15)
--------------------------------------------------------------------------------
Overall portfolio                  $ 30            *           *            $ 40
--------------------------------------------------------------------------------

<CAPTION>
--------------------------------------------------------------------------------
                                   1994         1994        1994    December 31,
Market Risk (in millions)       Average      Minimum     Maximum            1994
--------------------------------------------------------------------------------
<S>                             <C>          <C>         <C>        <C>
Interest rate                      $ 29          $17         $60            $ 18
Currency                             10            4          30              12
Equity                               15           10          20              14
Commodity                             2            1           5               2
Diversification                     (21)          --          --             (18)
--------------------------------------------------------------------------------
Overall portfolio                  $ 35            *           *            $ 28
--------------------------------------------------------------------------------
<FN>
* The minimum (maximum) for each risk category occurred on different days so it
  is not meaningful to total the amounts presented above. During 1995 and 1994,
  respectively, the minimum Daily Price Volatilities for the overall portfolio were $19 million and
  $25 million, and the maximum Daily Price Volatilities were $44 million and $76 million.
</FN>
</TABLE>

    The methodology underlying these Daily Price Volatility calculations and the
risk-adjusted return on capital ("RAROC(TM)") calculations described below
relies on established asset pricing and statistical models. A question that
naturally arises is the validity of this risk measurement process. Figure 2
attempts to shed some light on this question by comparing Daily Price Volatility
to accounting profit/loss flows for each business day. In particular, Figure 2
plots for each day the Daily Price Volatility (horizontal axis) against the
absolute value of the corresponding accounting profit/loss flow. Observations
that lie above the diagonal line that bisects the diagram indicate days when the
absolute value of the profit or loss exceeded the Daily Price Volatility, which
occurs when the accounting profit or loss lies outside the confidence interval
implied by the Daily Price Volatility. Although Daily Price Volatility
represents a loss figure that should occur or be exceeded less than 1 percent of
the time, there is also approximately a 1 percent chance that profits on any
given day would exceed the absolute value of this number. Thus, the statistical
specification underlying the Daily Price Volatility methodology implies that
approximately 2 percent (or approximately five) of the observations should lie
above the diagonal in the diagram. It is important to note that Daily Price
Volatility measures the risk of a static portfolio, but the profits and losses
occurring in any given day reflect a changing portfolio. Furthermore, because
Daily Price Volatility measures the potential economic variation in the
Corporation's market sensitive positions, it includes the risk of certain
positions


                          BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 45
<PAGE>   16
--------------------------------------------------------------------------------

that are not marked-to-market daily in accordance with accounting standards and
that are omitted from the portion of the Corporation's daily profit/loss flows
reported in these diagrams. Despite this lack of exact comparability, these
diagrams indicate that the methodology provides a reasonable statistical measure
of the Corporation's exposure to market risk.

FIGURE 2
BTNY 1995 DAILY PRICE VOLATILITY VS. DAILY P&L

    The Figure displays a scatter diagram of Daily Price Volatility and P&L
pairs that occurred during the year for BTNY. The diagram is square in shape
with a diagonal line that slopes upward from the left bottom corner to the
right upper corner of the diagram. The horizontal axis shows the Daily Price
Volatility with a range of $0 million to $50 million. The vertical axis shows
the absolute values of daily P&L, also with a range of $0 million to $50
million. The scatter plot shows that all but 2 points lie below the diagonal,
meaning the Daily Price Volatility is more than the absolute value of that
day's P&L for all but two points. These two points lie approximately $2 million
and $5 million above the diagonal and occur at $21 million and $23 million of
DPV, respectively. Most points are substantially below the diagonal. Three
points are each about $2 million to $3 million below the diagonal at DPV values
of $20 million, $24 million, and $40 million. There are two concentrations of
points, with both lying near the horizontal axis. The first occurs at Daily
Price Volatilities of approximately $20 million to $25 million and contains
more points than the second concentration. The second concentration occurs at a
Daily Price Volatility of approximately $38 million to $42 million.

    Two points lie above the diagonal in the diagram. One is due to profits that
exceeded the Daily Price Volatility on a given day. The other is due to a loss.
Both of these points were produced by unusual volatility in emerging markets,
and in the case of the profit point, the changes in the values of emerging
market financial instruments were reinforced by large profit flows from new
deals on that day.

    The Daily Price Volatility, as a statistical measure of potential loss,
provides an objective benchmark of portfolio risk which complements, but does
not substitute for, management's judgment of the appropriate level and mix of
risk taken by the Corporation. Furthermore, the methodology employed in the
calculation of Daily Price Volatility will change due to enhancements in
risk-assessment and information-processing technologies and as new risks are
undertaken by the Corporation.

    Daily Price Volatility is supplemented by the statistical measures of risk
and return provided by the RAROC(TM) system (discussed below), by scenario
analyses performed periodically by the risk management group, and by a formal
limits process that monitors excess concentration or exposure to liquidity risk
in the portfolio. The RAROC(TM) system provides information on the potential
effect of large changes in interest rates, currency, equity and commodity
prices, and volatilities. As such, it produces a stress test of the
Corporation's positions each business day. Taken together, all of these measures
and reports provide the Corporation's senior management with timely and relevant
risk information.

RAROC(TM)--Performance Measurement and Capital Adequacy

The Corporation pioneered the development of risk-based capital attribution
processes. The Corporation's risk capital model, RAROC,(TM) is integral to
management's conceptual framework for strategic decision making. This framework
has as its objective maximizing return on risk capital, where risk capital is
attributed to a business activity according to the level of risk it assumes.
Risk capital calculated by the RAROC(TM) framework is used to support decisions
on the allocation of human and financial resources. In addition, the disciplined
assessment of risk in RAROC(TM) produces a benchmark for assessing capital
adequacy both for the Corporation and for its major businesses.

    The definition of risk capital produced by the RAROC(TM) process is the
amount of funds required 99 percent of the time to cover a potential after-tax
loss over a one year holding period. Specifically, if the Corporation maintained
an absolutely static portfolio for one year, there would be less than a 1
percent chance that the portfolio would decline in value by more than the
RAROC(TM) risk capital amount after adjusting for taxes.

    RAROC(TM) is designed to assess the following general classes of risk:
market risk, credit risk and operational risk. Market risk is the potential loss
in economic (fair) value due to changes in interest rates, currency, equity and
commodity prices, and volatilities. Financial instruments of the Corporation
whose fair values are functions of these market variables are included in the
assessment of market risk irrespective of accounting designation. Credit risk is
defined as potential loss in fair value of all extensions of credit, on and off
balance sheet, by the Corporation.

    Operational risk is defined by the Corporation in the context of five risk
classes: Employee, Technology, Relationship/Liability, Physical Assets, and
Other External. Losses that are characterized as operational include but are not
limited to the following examples: losses due to personnel unavailability or
injury, natural disasters, the failure of external systems such as an exchange,
or a failure of internal controls. By their nature, these risks are difficult to
measure or quantify and are therefore handled judgementally and with less
precision than other types of risks.


46 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   17
--------------------------------------------------------------------------------

CREDIT RISK MANAGEMENT

The Credit Policy Department, headed by the Chief Credit Officer, is responsible
for developing credit policies, as well as for monitoring and managing overall
credit risk. The department evaluates the creditworthiness of each
borrower/issuer/counterparty and assigns a rating for each. Credit limits are
established at the portfolio level by borrower/issuer/counterparty and by other
categories. One credit officer is responsible for reviewing the entire credit
risk portfolio of a borrower/issuer/counterparty regardless of the nature of the
exposure (e.g. loans, securities, derivatives). Credit officers also monitor the
usage of credit risk by entity versus the limits at the product and business
activity level. The Credit Policy Department monitors country exposures and
assigns country risk ratings. It also monitors country, industry,
borrower/issuer/counterparty, product and regional risk concentrations in order
to evaluate the degree of diversification in the portfolio.

    RAROC(TM) credit capital represents the translation into potential losses of
the exposure of the overall portfolio of the Corporation to default risk. This
translation is accomplished using proprietary statistical models. These
statistical models incorporate information on the duration of the exposure, the
potential magnitude of the exposure, and the creditworthiness of the borrower/
issuer/counterparty. The Corporation's senior risk managers regularly review and
actively manage the credit risks at the portfolio level to ensure that the risk
characteristics and degree of diversification as reflected in RAROC(TM) capital
calculations conform with the Corporation's policies.

DERIVATIVES

Derivatives are swaps, futures, forwards, options and other similar types of
contracts based on interest rates, foreign exchange rates and the prices of
equities and commodities (or related indices). Derivatives are generally either
privately-negotiated over-the-counter ("OTC") contracts or standard contracts
transacted through regulated exchanges. OTC contracts generally consist of
swaps, forwards and options. In the normal course of business, with the
agreement of the original customer, OTC derivatives may be terminated or
assigned to another customer. Exchange-traded derivatives include futures and
options. These capital markets products are described further in Note 22 of
Notes to Financial Statements. Derivatives may be used for either trading or
end-user purposes.

Trading Derivatives

The Corporation holds derivatives in connection with its activities as a dealer
acting as principal for particular transactions with clients, as a market maker
quoting bid and offer prices to provide liquidity and regular availability of
derivatives for clients, as a risk manager of its own trading positions
resulting from these client-driven transactions and, finally, as a position
taker in the expectation of profiting from favorable movements in prices or
rates. As a result, the Corporation may build up sizable positions in
derivatives. The risks of derivative positions are managed in accordance with
the Corporation's risk management policies.

    Substantially all of the Corporation's derivative positions at December 31,
1995 were trading-related, with gains and losses included in trading revenue as
they occur. Contracts with positive fair values are recorded as assets and
contracts with negative fair values are recorded as liabilities, after
application of qualifying master netting agreements. These positions may vary in
size from period to period, similar to the positions in cash instruments also
carried in the Corporation's trading account. Average trading assets and trading
liabilities related to derivatives during 1995 were $13.7 billion and $13.2
billion, respectively. The notional amounts, which are not recorded on the
balance sheet, of trading derivatives totaled $1,702 billion at December 31,
1995 and indicate the volume of activity but do not represent the Corporation's
exposure to market or credit risk.

End-User Derivatives

The Corporation utilizes end-user derivatives to manage exposures to interest
rate, foreign currency and equity market risks associated with certain
liabilities and assets such as interest-bearing deposits, short-term borrowings
and long-term debt as well as securities available for sale, investments in
non-marketable equity securities and net investments in foreign subsidiaries.
For example, the Corporation's Treasury Department, which manages the majority
of the Corporation's end-user derivatives, utilizes certain instruments
(principally interest rate swaps) to transform fixed-rate-paying liabilities
into variable-rate-paying liabilities. See Note 24 and Note 22 of Notes to
Financial Statements for the fair value of end-user derivatives and related
financial instruments and additional end-user information. The notional amounts,
which are not recorded on the balance sheet, of end-user derivatives totaled $65
billion at December 31, 1995 and indicate the volume of activity but do not
represent the Corporation's exposure to market or credit risk. These contracts
represent less than 4 percent of the aggregate notional amounts of all
derivatives outstanding at year end.


                          BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 47
<PAGE>   18
--------------------------------------------------------------------------------

Market Risk

The market risk of derivatives arises principally from the potential for changes
in interest rates, foreign exchange rates, and equity and commodity prices and
is generally similar to the market risk of the cash instruments underlying the
contracts. The market risk to the Corporation is not measured by the price
sensitivity of the individual contracts, but by the net price sensitivity of the
relevant portfolio, including cash instruments. The Corporation generally
manages its exposures by taking risk-offsetting positions. Therefore, the
Corporation believes it is not meaningful to view the market risk of derivatives
in isolation. Market exposures arising from derivatives are monitored in the
Corporation's RAROC(TM) system and are included in the Daily Price Volatility
amounts discussed in the preceding Risk Management section.

Liquidity Risk

In times of stress, sharp price movements or volatility shocks may reduce
liquidity in certain derivatives positions, as well as in cash instruments. The
liquidity risk of derivatives is substantially based on the liquidity of the
underlying cash instrument, which affects the ability of the Corporation to
alter the risk profile of its positions rapidly and at a reasonable cost. The
Corporation's mark-to-market practices for derivatives include adjustments in
consideration of liquidity risks, when appropriate. These practices are
consistent with those applied to the Corporation's trading positions in cash
instruments.

Derivatives-Related Credit Risk

Derivative transactions create dynamic credit exposure which changes as markets
move. The credit risk of derivatives arises from the potential for a customer to
default on its contractual obligations. Accordingly, credit risk related to
derivatives depends on the following: the current fair value of the contracts
with the customer; the potential credit exposure over time; the extent to which
legally enforceable netting arrangements allow the fair value of offsetting
contracts with that customer to be netted against each other; the extent to
which collateral held against the contracts reduces credit risk exposure; and
the likelihood of default by the customer.

    The Corporation monitors and manages the credit risk associated with
derivatives by applying a uniform credit process for all credit exposures. The
credit risk of derivatives is included in the Corporation's centralized credit
management and RAROC(TM) systems. In order to reduce derivatives-related credit
risk, the Corporation enters into master netting agreements that provide for
offsetting of all contracts under each such agreement and obtains collateral
where appropriate. Such master netting agreements contemplate payment netting as
well as the net settlement of all covered contracts through a single payment in
a single currency with the same counterparty in the event that a default
(including insolvency) under the agreement occurs. The Corporation monitors
credit risk exposure on a gross and a net basis and on a collateralized and an
uncollateralized basis, as appropriate.


48 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   19
--------------------------------------------------------------------------------

    Table 7 summarizes the Corporation's derivatives-related credit risk. It
displays, by internal rating, the Corporation's current credit risk to
customers. The majority of the Corporation's derivative transactions are with
foreign and U.S. commercial banks, as well as corporations, governments and
their agencies, securities firms and other financial institutions. Current
credit risk is calculated based on the current replacement cost of outstanding
positions with customers in OTC derivative financial instruments. The gross
replacement cost of a derivative portfolio with a customer is the positive
mark-to-market value of all transactions with that customer without the effects
of netting or collateral arrangements. The replacement costs, after netting and
collateral, of $8.683 billion more accurately portray the credit risk associated
with the Corporation's derivatives activities with external customers at
December 31, 1995 than do the gross replacement costs. The significant decrease
from 1994 in replacement costs after netting and collateral is primarily
attributable to an increase in the impact of netting agreements with customers
rated 1 to 4 (investment-grade customers), rather than to a decrease in the
related gross replacement costs. Approximately 92 percent of the
derivatives-related credit risk at December 31, 1995 was to investment-grade
customers.

    The weighted average remaining maturity of the OTC trading derivatives
portfolio was approximately 2 2/3 years for customers rated 1 to 4, 2 1/2 years
for customers rated 5, and 1 1/3 years for customers rated 6 to 8.

    Internal ratings are based upon the Corporation's assessment of the
customer's creditworthiness. Ratings of 1 to 4 generally equate to
investment-grade ratings (BBB/Baa and higher) from rating agencies in the U.S.
markets. A rating of 5 usually approximates long-term debt ratings of BB/Ba.
Ratings of 6 to 8 are generally equivalent to B/B and below. Customers in the 6
to 8 category may be internally designated for special monitoring by the Credit
Audit Department. Factors such as guarantors and collateral held, as well as the
impact of country risk on private foreign companies, may differentiate the
Corporation's ratings from those of the rating agencies.

    The Corporation applies netting based upon the criteria prescribed by FIN
39, which provides that offsetting is appropriate where the available evidence
indicates that there are reasonable assurances that the right of setoff
contained in a master netting agreement governing derivatives contracts would be
upheld after default, including in the event of the customer's bankruptcy.

    Collateral also reduces credit risk. The Corporation generally accepts
collateral in the form of cash, U.S. Treasuries, and other approved securities
(generally, only liquid, marketable, publicly-traded securities are acceptable).


TABLE 7 DERIVATIVES-RELATED CREDIT RISK(1)

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                                                              Internal Rating For Customer
                                                                     ----------------------------------------------
(in millions) December 31, 1995                                       1 to 4          5          6 to 8      Total
-------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>           <C>           <C>       <C>
Replacement costs (gross)                                            $ 25,461      $ 2,259        $186     $ 27,906
Impact of netting agreements                                          (17,082)      (1,371)        (11)     (18,464)
-------------------------------------------------------------------------------------------------------------------
Replacement costs (after netting agreements)                            8,379          888         175        9,442
Collateral held and applied                                              (433)        (282)        (44)        (759)
-------------------------------------------------------------------------------------------------------------------
Replacement costs after netting and collateral                       $  7,946      $   606        $131     $  8,683
-------------------------------------------------------------------------------------------------------------------

Replacement costs after netting and collateral, December 31, 1994    $ 10,144      $   661        $132     $ 10,937
-------------------------------------------------------------------------------------------------------------------
<FN>
(1) End-user derivatives and exchange-traded contracts are not included.
</FN>
</TABLE>


                          BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 49
<PAGE>   20
--------------------------------------------------------------------------------

    The Corporation's allowance for credit losses is available for credit losses
related to derivatives contracts. Derivatives are considered by the Credit Audit
Department when it reviews both general and specific credit risks in the
Corporation's portfolio. Net charge-offs to the allowance that were related to
derivative contracts totaled $240 million during 1995 and $77 million during
1994 (see Leveraged Derivative Transactions section below).

    The international bank regulatory standards for risk-based capital consider
the credit risk arising from derivatives in the assessment of capital adequacy.
These standards were issued under the Basle Capital Accord of July 1988 and
adopted in 1989 by the U.S. bank regulators, including the Federal Reserve
Board. These standards use a formula-based assessment of customer credit risk
which, as amended at year-end 1995, reflect the credit-risk-reducing impact of
legally enforceable master netting agreements. These standards include a
calculation for estimating the potential future credit exposure caused by
potential price volatility (the "add-on"). At December 31, 1995, this add-on was
$10.2 billion before application of risk weightings, of which 91 percent, 8
percent, and 1 percent related to customers internally rated 1 to 4, 5, and 6 to
8, respectively. At December 31, 1995, the risk-weighted amounts (reflecting
both current and potential future credit exposure) that were calculated based on
these international standards for derivative financial instruments aggregated to
$7.4 billion.


    Presented in Table 8 below is a maturity profile of the Corporation's
trading derivative products. This profile indicates the extent of the
Corporation's involvement in derivative transactions of specific maturities and
also provides the basis for calculating the estimate of potential future credit
exposure (the add-on) under the international bank regulatory standards. The
percentages in Table 8 are based on notional amounts which do not necessarily
represent cash flows and do not represent a quantification of the market risk or
credit risk of these positions.

TABLE 8 MATURITY PROFILE OF TRADING DERIVATIVES(1)(2)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
                                                     Interest     Foreign      Equity-   Commodity
                                                         Rate    Exchange      Related   and Other
Remaining Maturity at December 31, 1995    Total    Contracts   Contracts    Contracts   Contracts
--------------------------------------------------------------------------------------------------
<S>                                        <C>      <C>         <C>          <C>         <C>
Within 12 months                              60%          25%         33%           1%          1%
After 1 but within 5 years                    32%          28%          4%          --%         --%
After 5 years                                  8%           7%          1%          --%         --%
--------------------------------------------------------------------------------------------------
Total                                        100%          60%         38%           1%          1%
--------------------------------------------------------------------------------------------------
<FN>
(1) Based on notional amounts. Includes both purchase and sale contracts and contracts for which
    the fair values are recorded as trading assets and as trading liabilities. The leveraging
    effects of leveraged derivative transactions are reflected above.
(2) Presented in accordance with the risk-based capital standards, this maturity profile does not
    include futures contracts, spot foreign exchange contracts, or options written. These types 
    of contracts are considered in the Corporation's market and credit risk management processes.

</FN>
</TABLE>

Leveraged Derivative Transactions

A leveraged derivative transaction is a specific type of derivative financial
instrument containing a formula or multiplier which, for any given change in
market prices, could cause the change in the transaction's fair value to be
significantly different from the change in fair value that would occur for a
similar transaction without the formula or multiplier. Cash instruments
(including structured notes) with embedded forward or option features and all
former leveraged derivative transactions that are now included in the loan
portfolio are excluded from the foregoing definition. The Corporation's
leveraged derivative transactions are carried at fair value in the trading
portfolio on the consolidated balance sheet and changes in fair value are
reported in trading revenue as they occur. The Corporation's leveraged
derivative transactions are affected by the same general market risks as the
trading portfolio as a whole and are subject to the risk management policies
outlined in the preceding section.


50 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   21
--------------------------------------------------------------------------------

    During 1995 $33 million of leveraged derivative transactions were
reclassified to the loan portfolio at amounts equal to or less than the
contractual amounts due, compared to $520 million in 1994. These transactions
are not included in Tables 7 and 8. In 1995, $245 million of these leveraged
derivative loans were charged-off to the allowance for credit losses, compared
to $72 million in 1994. An additional $90 million was charged to trading revenue
in 1995 resulting from settlements of leveraged derivative transactions
remaining in the trading portfolio. At December 31, 1995 the balance included in
loans after charge-offs and cash collections was $120 million of which $104
million was classified as cash basis loans. Based on an analysis of the
potential outcome of outstanding issues relating to leveraged derivative
transactions, management believes that the expected potential financial impact
should be covered by existing reserves.

    For further information regarding regulatory and legal matters, refer to
"Supervision and Regulation" and "Legal Proceedings" on pages 103 and 105,
respectively.

    Further information applicable to derivatives in general may be found in the
following sections:

<TABLE>
<CAPTION>
Relevant Information                    Page          Title
--------------------------------------------------------------------------------
<S>                                     <C>           <C>
Risk-weighted amounts                    42           Capital Resources
Revenue by risk category                 36           Trading Revenue
Daily Price Volatility,
  RAROC(TM) and
   credit management                     44           Risk Management
Credit losses                            51           Summary of Credit Loss
                                                        Experience
Nonperforming amounts                    54           Nonperforming Assets
Accounting                               66           Significant Accounting
                                                        Policies
Balance sheet amounts                    68           Trading Assets and Trading
                                                        Liabilities
Product descriptions, fair values                     Derivatives and Financial
  and notional amounts                   83             Instruments With
                                                        Off-Balance Sheet Risk
Significant counterparties               87           Concentrations of Credit
                                                        Risk
End-user derivatives                     88           Fair Value of Financial
                                                        Instruments
</TABLE>

SUMMARY OF CREDIT LOSS EXPERIENCE

Charge-Off Procedures and Adequacy of the Allowance for Credit Losses

As part of the Corporation's overall management and control process, the Credit
Audit Department is charged with the responsibility for performing an ongoing
independent examination of the portfolio. Counterparty risk exposure is analyzed
across all product lines including loans, credit-related commitments,
derivatives and other financial instruments. All significant items in the
portfolio are reviewed annually; those under special supervision, such as cash
basis loans and renegotiated loans, are reviewed quarterly. In addition, all
levels of management are required to bring to the attention of the Credit Audit
Department any credit risk where an additional review of the counterparty's
financial position is believed to be warranted. The Credit Audit Department
reports at least quarterly to the Audit Committee of the Board of Directors
which, in turn, reports to the full Board of Directors, with recommendations for
charge-offs. The Board has the final decision-making responsibility in
authorizing charge-offs.

    In addition to the above procedures, federal and State of New York bank
examiners perform examinations of the Corporation's credit risks. The reports on
these examinations are reviewed by the Credit Audit Department with the Audit
Committee.

    The provision for credit losses is dependent upon management's evaluation as
to the amount needed to maintain the allowance for credit losses at a level
considered appropriate in relation to the risk of losses inherent in the
portfolio. Various factors are collectively weighed by management in determining
the adequacy of the allowance. The Credit Audit Department and bank regulatory
authorities assess and issue reports on the quality of the portfolio and on the
adequacy of the allowance. As part of their annual audit, the Corporation's
independent auditors assess the adequacy of the allowance and the provision for
credit losses. Their procedures include discussions with management, a review of
selected credit files and an evaluation of the periodic reports issued by the
Credit Audit Department and regulatory examiners.

    In the opinion of management, the allowance, when taken as a whole, is
adequate to absorb reasonably estimated credit losses inherent in the
Corporation's portfolio.


                          BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 51
<PAGE>   22
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TABLE 9 ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES
  The following table analyzes the changes in the allowance for credit losses.
--------------------------------------------------------------------------------
($ in millions) Year Ended December 31,                                     1995     1994       1993      1992     1991
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>      <C>        <C>       <C>      <C>
ALLOWANCE FOR CREDIT LOSSES, BEGINNING OF YEAR                            $1,252   $1,324     $1,620    $1,806   $2,169
-----------------------------------------------------------------------------------------------------------------------
CHARGE-OFFS
  Domestic (nonrefinancing country)
    Commercial and industrial                                                177       55         64       164       89
    Financial institutions                                                    --       11          4        --        2
    Real estate
      Construction                                                            10        1          6         3        1
      Mortgage                                                                22       23         51        35       22
    Other                                                                     --       --          1        --        1
  International
    Nonrefinancing country                                                   121       77        302        98      152
    Refinancing country                                                       --        1         32        43      220
-----------------------------------------------------------------------------------------------------------------------
Total charge-offs                                                            330      168        460       343      487
-----------------------------------------------------------------------------------------------------------------------
RECOVERIES
  Domestic (nonrefinancing country)
    Commercial and industrial                                                 11       24         19         7       24
    Financial institutions                                                    --       --         --        --       --
    Real estate
      Construction                                                            --        1         --        --       --
      Mortgage                                                                 4       --          1         1       --
    Other                                                                     --       --          2         2       --
  International
    Nonrefinancing country                                                    15        8          7        16        5
    Refinancing country                                                        9       38         42        23       20
-----------------------------------------------------------------------------------------------------------------------
Total recoveries                                                              39       71         71        49       49
-----------------------------------------------------------------------------------------------------------------------
TOTAL NET CHARGE-OFFS (1)                                                    291       97        389       294      438
LOSSES ON SALES AND SWAPS OF REFINANCING
COUNTRY LOANS                                                                 --       --         --       117      163
-----------------------------------------------------------------------------------------------------------------------
TOTAL NET CHARGES TO THE ALLOWANCE                                           291       97        389       411      601
PROVISION FOR CREDIT LOSSES                                                   31       25         93       225      238
-----------------------------------------------------------------------------------------------------------------------
ALLOWANCE FOR CREDIT LOSSES, END OF YEAR                                  $  992   $1,252     $1,324    $1,620   $1,806
-----------------------------------------------------------------------------------------------------------------------
PERCENTAGE OF TOTAL NET CHARGES TO
AVERAGE LOANS FOR THE YEAR                                                  2.48%     .78%      2.54%     2.45%    3.15%
-----------------------------------------------------------------------------------------------------------------------
(1) Components:
    Secured by real estate                                                $   23   $   24     $  116     $  71   $   61
    Real estate related                                                        2       23          3        27       40
    Highly leveraged                                                          30       (5)        15       117       63
    Other *                                                                  245       92        265        59       74
    Refinancing country                                                       (9)     (37)       (10)       20      200
-----------------------------------------------------------------------------------------------------------------------
      Total                                                               $  291   $   97     $  389    $  294   $  438
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

* The 1995 and 1994 amounts included net charge-offs of $240 million and $72
  million, respectively, related to leveraged derivative transactions.


52   BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   23
--------------------------------------------------------------------------------
Provision and Allowance for Credit Losses

    The provision for credit losses amounted to $31 million for 1995, compared
with $25 million for 1994 and $93 million in 1993.

    Total net charge-offs for 1995 were $291 million, compared with $97 million
in the prior year and $389 million during 1993. The current year net charge-offs
included $240 million of cash basis leveraged derivatives, compared to $72
million in 1994.

    Nonrefinancing country net charge-offs in 1995 and 1994 included $25 million
and $47 million of real estate loans, respectively. Net charge-offs of highly
leveraged borrowers were $30 million in 1995 compared to $5 million of net
recoveries reported in 1994. Refinancing net recoveries in 1995 and 1994 were $9
million and $37 million, respectively.

    The allowance for credit losses decreased to $992 million at December 31,
1995, from $1.252 billion at year-end 1994 and $1.324 billion at December 31,
1993. The allowance was equal to 133 percent, 126 percent and 136 percent of
total cash basis loans at December 31, 1995, 1994 and 1993, respectively.

    Pursuant to a regulatory requirement, the table below provides the
components of the allowance for credit losses by category. This breakdown of the
allowance at each year end reflects management's best estimate of possible
credit losses and may not necessarily be indicative of actual future
charge-offs. The allowance for credit losses is available for credit losses in
the entire portfolio, which is comprised of loans, credit-related commitments,
derivatives and other financial instruments. Therefore, the Corporation believes
that the allowance must be viewed in its entirety.

<TABLE>
<CAPTION>

(in millions) December 31,       1995    1994     1993    1992     1991
-----------------------------------------------------------------------
<S>                              <C>   <C>      <C>     <C>      <C>
Domestic
  Commercial and industrial      $165  $  133   $  115  $  162   $  147
  Financial institutions           20      20        8      19       32
  Real estate
    Construction                    8       5       15      10       10
    Mortgage                       70      54       65      50       60
  Other                             3       2        1       4       12
-----------------------------------------------------------------------
    Total domestic                266     214      204     245      261
International                     222     266      190     403      599
-----------------------------------------------------------------------
    Total allocated               488     480      394     648      860
Unallocated portion*
  Domestic                        306     402      599     368      347
  International                   198     370      331     604      599
-----------------------------------------------------------------------
 Total allowance for
  credit losses                  $992  $1,252   $1,324  $1,620   $1,806
 ----------------------------------------------------------------------
</TABLE>

 * This amount and any unabsorbed portion of the allocated allowance is also
   available for credit losses in the entire portfolio.

<TABLE>
<CAPTION>

    For purposes of providing information required by regulatory authorities and
subject to the above limitations, the following table presents an analysis of
the changes in the international component of the allowance for credit losses:
 
(in millions)
Year Ended December 31,          1995   1994     1993     1992       1991
-------------------------------------------------------------------------
<S>                              <C>    <C>    <C>      <C>        <C>  
Balance, beginning of year       $636   $521   $1,007   $1,198     $1,748
-------------------------------------------------------------------------
Net charge-offs
  Charge-offs                     121     78      334      141        372
  Recoveries                       24     46       49       39         25
-------------------------------------------------------------------------
    Total net charge-offs          97     32      285      102        347
Losses on sales and swaps of
  refinancing country loans        --     --       --      117        163
-------------------------------------------------------------------------
    Total net charges to
      the allowance                97     32      285      219        510
Provision for credit losses         9     11       40       61        148
Reallocation (to) from
  domestic allowance             (128)   136     (241)     (33)      (188)
-------------------------------------------------------------------------
Balance, end of year             $420   $636   $  521   $1,007     $1,198
-------------------------------------------------------------------------
</TABLE>

    The $128 million reallocation during 1995 from the international to the
domestic component of the allowance for credit losses, as well as the 1994
reallocation of $136 million from the domestic to the international component of
the allowance for credit losses, was based on the continuing evaluation of the
Corporation's overall credit portfolio.


                         BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES  53
<PAGE>   24
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NONPERFORMING ASSETS

    Table 10 shows the Corporation's trend of cash basis loans, renegotiated
loans, other real estate and other nonperforming assets.

TABLE 10 NONPERFORMING ASSETS
----------------------------------------------------------------------------------------------------------------------
($ in millions) December 31,                                        1995        1994         1993        1992     1991
----------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>         <C>          <C>       <C>      <C>
Cash basis loans (nonrefinancing country)
  Domestic
    Commercial and industrial                                       $263        $316         $285      $  481   $  588
    Secured by real estate                                           297         277          306         349      403
    Financial institutions                                            10          25           30           2        3
    Lease financing                                                   --          --           --           1        3
----------------------------------------------------------------------------------------------------------------------
       Total domestic                                                570         618          621         833      997
----------------------------------------------------------------------------------------------------------------------
  International
    Commercial and industrial                                        106         247           84         167      288
    Secured by real estate                                            65          79          149         148      172
    Financial institutions                                             3          48           --          --        5
    Other                                                             --           2            2           8        9
----------------------------------------------------------------------------------------------------------------------
       Total international                                           174         376          235         323      474
----------------------------------------------------------------------------------------------------------------------
       Total cash basis loans (nonrefinancing country)               744         994          856       1,156    1,471
Cash basis loans (refinancing country)
    International                                                     --           2          118         221      279
----------------------------------------------------------------------------------------------------------------------
Total cash basis loans                                              $744        $996         $974      $1,377   $1,750
----------------------------------------------------------------------------------------------------------------------
Ratio of cash basis loans to total loans                             5.9%        8.0%         6.4%        8.0%    10.3%
----------------------------------------------------------------------------------------------------------------------
Ratio of allowance for credit losses to cash basis loans             133%        126%         136%        118%     103%
----------------------------------------------------------------------------------------------------------------------
Renegotiated loans
    Venezuelan government Par Bonds                                 $ --        $ --         $ --      $   --   $  249
    Mexican government Par Bonds (1)                                  --          --           --         611      611
    Highly leveraged                                                  --          --            6          27       31
    Secured by real estate                                            88          65           14          20       --
    Other                                                             12           1            1           1       --
----------------------------------------------------------------------------------------------------------------------
Total renegotiated loans                                            $100        $ 66         $ 21      $  659   $  891
----------------------------------------------------------------------------------------------------------------------
Other real estate                                                   $259        $301         $287      $  315   $  255
----------------------------------------------------------------------------------------------------------------------
Other nonperforming assets
    Assets acquired in credit workouts                              $ 66        $ 61         $ 85      $   73   $   34
    Other                                                              1           2           16          32       28
----------------------------------------------------------------------------------------------------------------------
Total other nonperforming assets                                    $ 67        $ 63         $101      $  105   $   62
----------------------------------------------------------------------------------------------------------------------
Loans 90 days or more past due and still accruing interest (2)      $ 26        $ --         $ 40      $   86   $   15
----------------------------------------------------------------------------------------------------------------------
</TABLE>

 (1) During 1991, the Corporation reclassified its Mexican outstandings to
     nonrefinancing country status.

 (2) Represents loans 90 days or more past due with respect to interest or
     principal. These loans were considered to be well secured and were in the
     process of collection. The December 31, 1993 and 1992 balances includes $15
     million and $66 million of international loans, respectively.



54   BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   25
    Each quarter an extensive review is performed by the Credit Audit Department
and senior credit management of all cash basis loans and classified assets. Each
borrower/counterparty is examined to determine whether it represents a potential
loss. Whenever the probability of loss is believed to be greater than 50
percent, a charge-off of the amount deemed uncollectible is recommended to the
Audit Committee of the Board. Once a charge-off is taken the remaining portion,
if any, is immediately placed on a cash basis. If the probability of loss is
believed to be less than 50 percent, but collection or liquidation in full is
questionable if present trends continue, the asset is classified as doubtful. It
is the Corporation's policy to place all assets classified as doubtful on a cash
basis, even if the borrower is still making required payments. In addition, it
is generally the Corporation's policy that loans be immediately placed on a cash
basis when they become 90 days past due with respect to interest or principal.

    The Corporation's total cash basis loans amounted to $744 million at
December 31, 1995, a decrease of $252 million, or 25 percent, from 1994, which
had increased $22 million, or 2 percent, from 1993.

    Cash basis loans decreased $252 million during 1995, primarily due to
charge-offs of $245 million and payments of $81 million on cash basis leveraged
derivative contracts. These were partially offset by additional transfers of
leveraged derivative contracts to cash basis loans of $79 million. Based on an
analysis of the potential outcome of outstanding issues relating to leveraged
derivative transactions, management believes that the expected potential
financial impact should be covered by existing reserves.

    Within total nonrefinancing country cash basis loans, loans secured by real
estate increased by $6 million, to $362 million. Also included in total
nonrefinancing country cash basis loans were commercial and industrial loans to
highly leveraged borrowers which increased $3 million, to $153 million at
December 31, 1995.

    An analysis of the changes in the Corporation's total cash basis loans
follows:

<TABLE>
<CAPTION>
(in millions)
Year Ended December 31,                 1995    1994     1993    1992     1991
------------------------------------------------------------------------------
<S>                                    <C>     <C>     <C>     <C>      <C>
Balance, beginning of year             $ 996   $ 974   $1,377  $1,750   $1,764
Net transfers to cash basis loans        314     520      230     312      849
Net paydowns                            (221)   (130)    (140)   (112)    (182)
Charge-offs                             (330)   (163)    (232)   (322)    (479)
Net transfers from (to)
  other real estate                       13     (72)     (10)    (87)    (159)
Transfers to other
  nonperforming assets                    --      (7)     (58)    (45)      (4)
Loan sales                                (1)    (49)    (153)    (50)     (26)
Other                                    (27)    (77)     (40)    (69)     (13)
------------------------------------------------------------------------------
Balance, end of year                   $ 744   $ 996   $  974  $1,377   $1,750
------------------------------------------------------------------------------
</TABLE>

    The $22 million increase in total cash basis loans during 1994 reflected a
$138 million increase in nonrefinancing country cash basis loans and a $116
million decrease in refinancing country cash basis loans. Nonrefinancing country
cash basis loans increased during 1994, primarily due to $423 million of
leveraged derivative contracts that were reclassified as receivables to the loan
portfolio and placed on a cash basis. Of this amount, $72 million was
subsequently charged-off to the allowance for credit losses. Approximately one
half of the remainder related to transactions with Procter & Gamble.

    Within total nonrefinancing country cash basis loans, loans secured by real
estate decreased $99 million, to $356 million and real estate related loans
(included within the domestic commercial and industrial category in Table 10)
decreased by $29 million, to $29 million. Also included in total nonrefinancing
country cash basis loans were commercial and industrial loans to highly
leveraged borrowers which decreased $43 million, to $150 million at December 31,
1994. The decrease in refinancing country cash basis loans was primarily due to
the conversion of loans to Brady bonds when a debt exchange took place between
the Brazilian government and its commercial bank creditors, including the
Corporation, which completed the long-awaited refinancing of Brazil's medium-
and long-term debt.

    The Corporation's renegotiated loans increased $34 million and $45 million
during 1995 and 1994, respectively, primarily due to increases in loans secured
by real estate of $23 million and $51 million, respectively.

    Other real estate decreased $42 million during 1995 primarily as a result of
the adoption of SFAS 114 during the first quarter of 1995. SFAS 114 required the
transfer of in-substance foreclosed properties, where the Corporation had not
taken possession of the collateral, to cash basis loans.

SPECIAL PORTFOLIO SEGMENTS
REAL ESTATE PORTFOLIO

    The global real estate loan portfolio totaled $1.802 billion at December 31,
1995. This included domestic loans secured by real estate of $1.430 billion,
international loans secured by real estate of $178 million, and total real
estate related loans of $194 million. The largest geographic concentration
within loans secured by real estate was in properties in the Mid-Atlantic
region, at 39 percent, of which New York City and its suburbs comprised
approximately 49 percent. The next largest geographic concentrations were loans
secured by properties in the Midwest region and California, each of which
comprised 14% of the total. The largest product-type concentrations were loans
secured by mixed-use properties, apartments, office buildings, and 1-4 family
residential properties at 20 percent, 17 percent, 16 percent and 15 percent,
respectively. All

                     BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES    55
<PAGE>   26
other concentrations were individually less than 10 percent of total loans
secured by real estate. Approximately 30 percent of the loans secured by real
estate were purchased in the secondary market during 1995. These are comprised
primarily of domestic multifamily residential loans. Real estate related loans
consist of loans made for any purpose to organizations or individuals, 80
percent of whose revenues or assets are derived from or consist of real estate
ventures or holdings, that are not collateralized by cash or marketable
securities and are not secured by real estate. The Corporation was also
obligated under $308 million of standby letters of credit and $135 million of
unused commitments to extend credit in connection with its commercial real
estate financing activities at December 31, 1995.

    Because of the diversity of the portfolio, the risks of real estate lending
reflect both general and local economic conditions. Management closely monitors
the portfolio, and formal reviews are conducted at least annually, with many
exposures reviewed quarterly. Table 11 details the global real estate portfolio
at December 31, 1995.

<TABLE>
<CAPTION>
TABLE 11 REAL ESTATE LOANS AND OTHER REAL ESTATE
--------------------------------------------------------------------------------------------------
                                                            Outstanding Balance
                                                     ---------------------------------
                                                                    Inter-              Cash Basis
($ in millions) December 31, 1995                    Domestic     national       Total     Balance
--------------------------------------------------------------------------------------------------
<S>                                                    <C>            <C>       <C>           <C>
Loans secured by real estate
  Land under development                               $   26         $  2      $   28        $ 21
  Construction
    Under construction                                      8           --           8           2
    In lease-up (1)                                       120           --         120          17
  Standing (2)
    1-4 family residential                                212           29         241           4
    Multifamily residential                               373            2         375          36
    Commercial                                            691          145         836(3)      282
--------------------------------------------------------------------------------------------------
      Total loans secured by real estate                1,430          178       1,608         362
Real estate related loans                                 153           41         194          23
--------------------------------------------------------------------------------------------------
Total real estate loans                                $1,583         $219      $1,802        $385
--------------------------------------------------------------------------------------------------
Other real estate                                      $  156         $103      $  259
--------------------------------------------------------------------------------------
</TABLE>

(1) In lease-up are completed properties that are less than 85 percent
    leased-up.

(2) Standing properties have been built, developed and leased-up such that the
    project is considered stabilized.

(3) Includes $88 million of renegotiated loans.
 
56  BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES

<PAGE>   27
HIGHLY LEVERAGED TRANSACTIONS

  For purposes of monitoring the extent of its exposure to highly leveraged
  transactions ("HLTs"), the Corporation utilizes the following definition. HLTs
  are financing transactions the purpose of which involves a buyout, acquisition
  or recapitalization and which (i) doubles the subject company's liabilities
  and results in a leverage ratio higher than 50 percent or (ii) results in a
  leverage ratio higher than 75 percent or (iii) is designated an HLT by a
  syndication agent. Borrowers are delisted from HLT status when (1) cash flow
  tests, relative to their industry or peer group, are met, or (2) they are no
  longer highly leveraged upon emergence from Chapter 11 bankruptcy or similar
  proceeding. In addition, certain loans which are fully collateralized by cash
  or cash equivalent securities are excluded from HLT reporting.

      Amounts included in the table and discussion which follow generally
  reflect the above definition.

<TABLE>
<CAPTION>

TABLE 12 HIGHLY LEVERAGED TRANSACTIONS

(in millions) December 31,                    1995        1994
--------------------------------------------------------------
<S>                                         <C>         <C>
Loans
  Senior debt                               $1,105      $  959
  Subordinated debt                             68         101
--------------------------------------------------------------
Total loans                                 $1,173      $1,060
--------------------------------------------------------------
Unfunded commitments
  Commitments to lend                       $  539      $  311
  Letters of credit                            263         198
--------------------------------------------------------------
Total unfunded commitments                  $  802      $  509
--------------------------------------------------------------
Equity investments                          $  648      $  413
--------------------------------------------------------------
Commitments to invest                       $  289      $  313
--------------------------------------------------------------
</TABLE>


    The Corporation's outstanding loans were to 97 separate borrowers in 38
separate industry groups at December 31, 1995, compared to 76 separate borrowers
in 30 separate industry groups at December 31, 1994. The wholesale and retail
food group and the motor vehicles (tires and parts) group, both at 11 percent,
were the only industry concentrations which exceeded 10 percent of total HLT
loans outstanding at December 31, 1995.

    In addition to the amounts shown in Table 12, at December 31, 1995, the
Corporation had issued commitment letters which had been accepted, subject to
documentation and certain other conditions, of $2.2 billion (which were in
various stages of syndication) and had additional HLTs in various stages of
discussion and negotiation.

    During 1995, the Corporation originated $1.9 billion of HLT commitments. It
should be noted that the Corporation's loans and commitments in connection with
HLTs fluctuate as new loans and commitments are made and as loans and
commitments are syndicated, participated or paid.

    All loans and commitments to finance HLTs are reviewed and approved by
senior credit officers of the Corporation. In addition to a strict transactional
and credit approval process, the portfolio of leveraged loans and commitments is
actively monitored and managed to minimize risk through diversification among
borrowers and industries. As part of this strategy, sell and hold targets are
regularly updated in connection with market opportunities and the addition of
new HLTs. Retention by the Corporation after syndication and sales of loan
participations has typically been less than $50 million, and the average
outstanding per borrower for the portfolio at December 31, 1995 was less than
$13 million. However, at December 31, 1995, the Corporation had total exposure
(loans outstanding plus unfunded commitments) in excess of $50 million to 9
separate highly leveraged borrowers.

    At December 31, 1995, $153 million of the HLT loan portfolio was on a cash
basis. In addition, $6 million of the equity investments in HLT companies
represented assets acquired in credit workouts, which are reported as other
nonperforming assets. Net charge-offs of $30 million of HLT loans were recorded
in 1995. In addition, the Corporation recorded a net gain of $269 million in
connection with the sales and/or write-offs of certain equity investments in
highly leveraged companies during 1995. Included in this amount was a $207
million gain on sale of most of the Corporation's merchant banking investment in
Northwest Airlines Corporation.

    Generally, fees (typically 2 to 4 percent of the principal amount committed)
and interest charged (typically LIBOR plus 1.5 to 3 percent) on HLT loans are
higher than on other credits. The Corporation does not account for revenue or
expenses from HLTs separately from its other corporate lending activities.
However, it is estimated that transaction fees recognized for lending activities
relating to highly leveraged transactions were approximately $119 million during
1995 and that as of December 31, 1995, approximately $17 million of fees were
deferred and will be recognized as future revenue.

CROSS-BORDER OUTSTANDINGS

The Corporation's cross-border outstandings reflect certain additional economic
and political risks beyond those associated with its domestic outstandings. 
These risks include those arising from exchange rate fluctuations, restrictions 
on the transfer of funds and balance-of-payments issues.

    Set forth in Table 13 are the Corporation's cross-border outstandings at
December 31, 1995, 1994 and 1993, for each foreign country where such
outstandings exceeded one percent of total assets. The cross-border outstandings
were compiled based upon category and domicile of ultimate risk and are
comprised of balances with banks, trading securities, securities available for
sale, securities purchased under resale agreements, loans, accrued interest
receivable, acceptances outstanding and investments with foreign entities. The
amounts outstanding for each country exclude local currency outstandings. The
Corporation does not have significant local currency outstandings to the
individual countries listed in the following table that are not hedged or are
not funded by local currency borrowings.

                        BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES  57
<PAGE>   28
<TABLE>
<CAPTION>
TABLE 13 CROSS-BORDER OUTSTANDINGS
----------------------------------------------------------------------------------------------------------------
                                                                  Governments      Banks and
                                                          % of            and          Other  Commercial
                                               Total     Total       Official      Financial         and
($ in millions)                         Outstandings    Assets   Institutions   Institutions  Industrial   Other
----------------------------------------------------------------------------------------------------------------
<S>                                           <C>         <C>          <C>            <C>           <C>    <C>
At December 31, 1995
  Japan (1)                                   $2,844      2.73%        $  456         $1,393        $987   $   8
  France                                       2,150      2.07            291          1,615         244      --
  United Kingdom                               1,945      1.87             19          1,448         478      --
  Spain                                        1,877      1.80          1,338            494          44       1
  Italy                                        1,522      1.46          1,265            209          48      --
  Brazil (2)                                   1,120      1.08            475            494         151      --
----------------------------------------------------------------------------------------------------------------
At December 31, 1994
  Japan                                       $4,661      4.80%        $1,911         $2,267        $483   $  --
  United Kingdom                               1,960      2.02             26          1,787         145       2
  Italy                                        1,574      1.62          1,039            449          86      --
  France                                       1,559      1.61            105          1,091         363      --
  Germany                                      1,424      1.47            585            698         140       1
  Mexico (2)                                   1,416      1.46            509            801         106      --
  Argentina (2)                                1,072      1.10            912             22         138      --
  Spain                                        1,035      1.07            628            374          32       1
----------------------------------------------------------------------------------------------------------------
At December 31, 1993
  Japan                                       $3,986      4.33%        $1,368         $1,920        $698   $  --
  France                                       2,630      2.86          1,248          1,167         215      --
  United Kingdom                               2,585      2.81             32          2,396         153       4
  Italy                                        2,178      2.37          1,807            299          72      --
  Mexico (2)                                   1,641      1.78          1,226            314         101      --
  Germany                                      1,623      1.76            981            348         294      --
  Spain                                        1,135      1.23            849            195          90       1
----------------------------------------------------------------------------------------------------------------
</TABLE>

(1) At December 31, 1995, the Corporation's cross-border outstandings with
    Japanese banks and other financial institutions primarily consisted of
    interest bearing deposits with banks and trading assets carried at fair
    value.

(2) The Corporation's cross-border outstandings as presented above for Brazil
    and Argentina primarily consisted of trading assets which are carried at
    fair value. The cross-border outstandings for Mexico primarily consisted of
    trading assets carried at fair value and securities purchased under resale
    agreements.
 

58  BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   29
    Governments and official institutions are comprised of foreign governments
and their agencies; state, provincial and local governments and their agencies;
and central banks. Banks and other financial institutions are comprised of
commercial and savings banks and other similar institutions accepting short-term
deposits, including government-owned banks which do not function as central
banks, and nonbank credit and financial companies.

    The following table details the cash basis loans and renegotiated loans
components of the outstandings included in Table 13.

<TABLE>
<CAPTION>
                                         Cash Basis    Renegotiated
(in millions)                                 Loans           Loans
-------------------------------------------------------------------
<S>                                             <C>            <C>
At December 31, 1995
  Italy                                         $16            $ --
  Other                                          --              --
-------------------------------------------------------------------
Total                                           $16            $ --
-------------------------------------------------------------------
At December 31, 1994
  United Kingdom                                $11            $ --
  Other                                          27              --
-------------------------------------------------------------------
Total                                           $38            $ --
-------------------------------------------------------------------
At December 31, 1993
  United Kingdom                                $10            $ --
  Other                                          10              --
-------------------------------------------------------------------
Total                                           $20            $ --
-------------------------------------------------------------------
</TABLE>

    At December 31, 1995, total cross-border commitments to borrowers or
counterparties domiciled in the countries presented in Table 13 were: Japan, $47
million; France, $130 million; United Kingdom, $472 million; Spain, $27 million;
Italy, $7 million; and Brazil, $18 million.

    Mexico, Germany and Belgium were the only countries whose cross-border
outstanding was between .75 percent and 1.00 percent of total assets at December
31, 1995. The aggregate cross-border outstandings for these countries amounted
to $1.0 billion, or .98 percent of total assets for Mexico (a majority of which
consisted of trading assets carried at fair value), $939 million, or .90 percent
of total assets for Germany, and $840 million, or .81 percent of total assets
for Belgium.

    Switzerland was the only country whose cross-border out-standing was
between .75 percent and 1.00 percent of total assets at December 31, 1994. The
aggregate cross-border outstandings for this country amounted to $963 million,
or .99 percent of total assets.

    Argentina was the only country whose cross-border outstanding was between
 .75 and 1.00 percent of total assets at December 31, 1993. The aggregate
cross-border outstandings for this country amounted to $845 million, or .92
percent of total assets.

ACCOUNTING DEVELOPMENTS

    The following is a summary of accounting developments.

Stock-Based Compensation

  In October 1995, the FASB issued SFAS 123, "Accounting for Stock-Based
  Compensation." SFAS 123 defines a fair value based method of accounting for an
  employee stock option or similar equity instrument and encourages all entities
  to adopt that method of accounting for all of their employee stock
  compensation plans. Under the fair value based method, compensation cost is
  measured at the grant date based on the value of the award. However, SFAS 123
  also allows an entity to continue to measure compensation cost for those plans
  using the intrinsic value based method of accounting prescribed by APB Opinion
  No. 25, "Accounting for Stock Issued to Employees." Under the intrinsic value
  based method, compensation cost is the excess, if any, of the quoted market
  price of the stock at grant date or other measurement date over the amount an
  employee must pay to acquire the stock. Entities electing to remain with the
  accounting in Opinion 25 must make pro forma disclosures of net income and
  earnings per share as if the fair value based method of accounting had been
  applied. The pro forma disclosure requirements are effective for financial
  statements for fiscal years beginning after December 15, 1995.

     The Corporation intends to continue to measure compensation cost under
  Opinion 25 with pro forma disclosures to be made as required by SFAS 123 for
  financial statements for fiscal years beginning after December 15, 1995. Thus,
  adoption of SFAS 123 will not have an impact on the Corporation's net income,
  stockholders' equity or total assets.

Valuation of Derivative Portfolios

  In the first quarter of 1996, the Corporation will change the method of
  adjusting valuation-model-derived values in its derivative portfolios. The
  Corporation will adopt an approach based on mid-market less specific
  adjustments as recommended by the Global Derivatives Study Group ("G-30") and
  contained in its July, 1993 report entitled "Derivatives: Practices and
  Principles." This change will not have a material impact on the Corporation's
  net income, stockholders' equity or total assets.
 
                         BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES  59

<PAGE>   30
                              FINANCIAL STATEMENTS
                              --------------------

                                       62
                        CONSOLIDATED STATEMENT OF INCOME

                                       63
                           CONSOLIDATED BALANCE SHEET

                                       64
           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

                                       65
                      CONSOLIDATED STATEMENT OF CASH FLOWS

                                       66
                         NOTES TO FINANCIAL STATEMENTS

                                       95
         MANAGEMENT'S REPORT ON RESPONSIBILITY FOR FINANCIAL REPORTING

                                       96
                         REPORT OF INDEPENDENT AUDITORS




                          SUPPLEMENTAL FINANCIAL DATA
                          ---------------------------

                                       97
              CONDENSED QUARTERLY CONSOLIDATED STATEMENT OF INCOME

                                       97
                                STOCKHOLDER DATA

                                       98
                  AVERAGE BALANCES, INTEREST AND AVERAGE RATES

                                      100
            VOLUME/RATE ANALYSIS OF CHANGES IN NET INTEREST REVENUE

                                      101
                           INTEREST RATE SENSITIVITY

                                      101
                                    DEPOSITS


                                  10-K REPORT
                                  -----------

This Annual Report includes the Corporation's SEC Report on Form 10-K. However,
portions of the Annual Report, such as pages 2-31, are not required by the Form
10-K report and are not part of the Corporation's Form 10-K. Only those sections
of the Annual Report referenced in the cross-reference index on page 108 are
incorporated in the Form 10-K.

                          BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 61
<PAGE>   31
<TABLE>
<CAPTION>

CONSOLIDATED STATEMENT OF INCOME (in millions, except per share data)
----------------------------------------------------------------------------------------------------
Year Ended December 31,                                                     1995       1994     1993
----------------------------------------------------------------------------------------------------
<S>                                                                       <C>        <C>      <C>
NET INTEREST REVENUE
  Interest revenue                                                        $5,886     $5,030   $4,436
  Interest expense                                                         5,069      3,858    3,122
----------------------------------------------------------------------------------------------------
NET INTEREST REVENUE                                                         817      1,172    1,314
Provision for credit losses                                                   31         25       93
----------------------------------------------------------------------------------------------------
NET INTEREST REVENUE AFTER PROVISION FOR CREDIT LOSSES                       786      1,147    1,221
----------------------------------------------------------------------------------------------------
NONINTEREST REVENUE
  Trading                                                                    341        465    1,631
  Fiduciary and funds management                                             697        740      703
  Fees and commissions                                                       712        756      710
  Securities available for sale gains                                        180         72       --
  Investment securities gains                                                 --         --       13
  Other                                                                      493        440      307
----------------------------------------------------------------------------------------------------
Total noninterest revenue                                                  2,423      2,473    3,364
----------------------------------------------------------------------------------------------------
NONINTEREST EXPENSES
  Salaries                                                                   804        774      687
  Incentive compensation and employee benefits                               640        724    1,172
  Occupancy, net                                                             152        146      155
  Furniture and equipment                                                    162        163      144
  Provision for severance-related costs                                       50         --       --
  Other                                                                    1,090        944      877
----------------------------------------------------------------------------------------------------
Total noninterest expenses                                                 2,898      2,751    3,035
----------------------------------------------------------------------------------------------------
Income before income taxes and cumulative effects of accounting changes      311        869    1,550
Income taxes                                                                  96        254      480
----------------------------------------------------------------------------------------------------
INCOME BEFORE CUMULATIVE EFFECTS OF ACCOUNTING CHANGES                       215        615    1,070
Cumulative effects of accounting changes                                      --         --      (75)
----------------------------------------------------------------------------------------------------
NET INCOME                                                                $  215     $  615   $  995
----------------------------------------------------------------------------------------------------
NET INCOME APPLICABLE TO COMMON STOCK                                     $  164     $  587   $  972
----------------------------------------------------------------------------------------------------
PRIMARY EARNINGS PER COMMON SHARE:
  INCOME BEFORE CUMULATIVE EFFECTS OF ACCOUNTING CHANGES                  $ 2.03     $ 7.17   $12.40
  Cumulative effects of accounting changes                                    --         --     (.89)
----------------------------------------------------------------------------------------------------
  NET INCOME                                                              $ 2.03     $ 7.17   $11.51
----------------------------------------------------------------------------------------------------
FULLY DILUTED EARNINGS PER COMMON SHARE:
  INCOME BEFORE CUMULATIVE EFFECTS OF ACCOUNTING CHANGES                  $ 2.02     $ 7.17   $12.29
  Cumulative effects of accounting changes                                    --         --     (.88)
----------------------------------------------------------------------------------------------------
  NET INCOME                                                              $ 2.02     $ 7.17   $11.41
----------------------------------------------------------------------------------------------------
Cash dividends declared per common share                                  $ 4.00     $ 3.70   $ 3.24
----------------------------------------------------------------------------------------------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

62 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   32
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET ($ IN MILLIONS, EXCEPT PAR VALUE)
----------------------------------------------------------------------------------------------------
December 31,                                                                           1995     1994
----------------------------------------------------------------------------------------------------
<S>                                                                                <C>        <C>
ASSETS
Cash and due from banks                                                            $  2,337   $1,985
Interest-bearing deposits with banks                                                  2,023    3,390
Federal funds sold                                                                      854    2,544
Securities purchased under resale agreements                                         17,958    9,943
Securities borrowed                                                                   6,199    6,197
Trading assets                                                                       47,893   47,514
Securities available for sale                                                         6,283    7,475
Loans                                                                                12,633   12,501
Allowance for credit losses                                                            (992)  (1,252)
Premises and equipment, net                                                             896      915
Due from customers on acceptances                                                       500      378
Accounts receivable and accrued interest                                              4,220    2,356
Other assets                                                                          3,198    3,070
----------------------------------------------------------------------------------------------------
Total                                                                              $104,002  $97,016
----------------------------------------------------------------------------------------------------
LIABILITIES
Deposits
  Noninterest-bearing
    In domestic offices                                                           $   2,687   $3,285
    In foreign offices                                                                  605      541
  Interest-bearing
    In domestic offices                                                               5,402    5,769
    In foreign offices                                                               17,014   15,344
----------------------------------------------------------------------------------------------------
      Total deposits                                                                 25,708   24,939
Trading liabilities                                                                  26,091   20,949
Securities sold under repurchase agreements                                          15,247   15,617
Other short-term borrowings                                                          15,761   18,222
Acceptances outstanding                                                                 500      378
Accounts payable and accrued expenses                                                 3,931    3,174
Other liabilities                                                                     2,236    2,328
Long-term debt                                                                        9,294    6,455
----------------------------------------------------------------------------------------------------
Total liabilities                                                                    98,768   92,062
----------------------------------------------------------------------------------------------------
Commitments and contingent liabilities (Notes 7 and 22)

PREFERRED STOCK OF SUBSIDIARY                                                           250      250
----------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred stock                                                                         865      395
Common stock, $1 par value
  Authorized, 300,000,000 shares
  Issued 83,678,973 shares                                                               84       84
Capital surplus                                                                       1,302    1,317
Retained earnings                                                                     3,316    3,494
Common stock in treasury, at cost: 1995, 4,602,855 shares;
  1994, 5,609,707 shares                                                               (336)    (416)
Other                                                                                  (247)    (170)
----------------------------------------------------------------------------------------------------
Total stockholders' equity                                                            4,984    4,704
----------------------------------------------------------------------------------------------------
Total                                                                              $104,002  $97,016
----------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
 
                          BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 63
<PAGE>   33
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (IN MILLIONS)
---------------------------------------------------------------------------------------------------------------
Year Ended December 31,                                                                1995       1994     1993
---------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>        <C>      <C>
PREFERRED STOCK
Balance, beginning of year                                                           $  395     $  250   $  500
Preferred stock issued                                                                  470        350       --
Preferred stock redeemed                                                                 --       (205)    (250)
---------------------------------------------------------------------------------------------------------------
Balance, end of year                                                                    865        395      250
---------------------------------------------------------------------------------------------------------------
COMMON STOCK
Balance, beginning and end of year                                                       84         84       84
---------------------------------------------------------------------------------------------------------------
CAPITAL SURPLUS
Balance, beginning of year                                                            1,317      1,321    1,306
Preferred stock issuance and conversion costs                                           (17)        (8)      --
Common stock distributed under employee benefit plans                                     2          4       15
---------------------------------------------------------------------------------------------------------------
Balance, end of year                                                                  1,302      1,317    1,321
---------------------------------------------------------------------------------------------------------------
RETAINED EARNINGS
Balance, beginning of year                                                            3,494      3,226    2,552
Net income                                                                              215        615      995
Cash dividends declared
  Preferred stock                                                                       (47)       (28)     (22)
  Common stock                                                                         (314)      (291)    (265)
Treasury stock distributed under employee benefit plans                                 (32)       (28)     (34)
---------------------------------------------------------------------------------------------------------------
Balance, end of year                                                                  3,316      3,494    3,226
---------------------------------------------------------------------------------------------------------------
COMMON STOCK IN TREASURY, AT COST
Balance, beginning of year                                                             (416)      (233)     (52)
Purchases of stock                                                                      (38)      (267)    (313)
Restricted stock granted, net                                                            54         50       16
Treasury stock distributed under employee benefit plans                                  64         34      116
---------------------------------------------------------------------------------------------------------------
Balance, end of year                                                                   (336)      (416)    (233)
---------------------------------------------------------------------------------------------------------------
COMMON STOCK ISSUABLE -- STOCK AWARDS
Balance, beginning of year                                                              160        143       53
Deferred stock awards granted, net                                                       89         18      100
Deferred stock distributed                                                              (16)        (1)     (10)
---------------------------------------------------------------------------------------------------------------
Balance, end of year                                                                    233        160      143
---------------------------------------------------------------------------------------------------------------
DEFERRED COMPENSATION -- STOCK AWARDS
Balance, beginning of year                                                              (63)       (47)     (54)
Deferred stock awards granted, net                                                      (88)       (17)     (99)
Restricted stock granted, net                                                           (48)       (40)     (18)
Amortization of deferred compensation, net                                               48         41      124
---------------------------------------------------------------------------------------------------------------
Balance, end of year                                                                   (151)       (63)     (47)
---------------------------------------------------------------------------------------------------------------
CUMULATIVE TRANSLATION ADJUSTMENTS
Balance, beginning of year                                                             (336)      (319)    (288)
Translation adjustments                                                                  (3)       (76)     (36)
Income taxes applicable to translation adjustments                                       (9)        59        5
---------------------------------------------------------------------------------------------------------------
Balance, end of year                                                                   (348)      (336)    (319)
---------------------------------------------------------------------------------------------------------------
SECURITIES VALUATION ALLOWANCE
Balance, beginning of year                                                               69        109       20
Change in unrealized net gains, after applicable income taxes and minority interest     (50)       (40)       1
Unrealized net gain, net of applicable income taxes,
 on securities available for sale upon adoption of SFAS 115                              --         --       88
---------------------------------------------------------------------------------------------------------------
Balance, end of year                                                                     19         69      109
---------------------------------------------------------------------------------------------------------------
Total stockholders' equity, end of year                                              $4,984     $4,704   $4,534
---------------------------------------------------------------------------------------------------------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

64 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   34
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS (IN MILLIONS)
---------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31,                                                                              1995        1994        1993
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                               <C>         <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                                                        $   215     $   615    $    995
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
  Cumulative effects of accounting changes                                                             --          --          75
  Provision for credit losses                                                                          31          25          93
  Provision for severance-related costs                                                                50          --          --
  Provision for policyholder benefits                                                                 271         205         140
  Deferred income taxes                                                                              (259)       (141)        (37)
  Depreciation and amortization of premises and equipment                                             134         128         107
  Other, net                                                                                          (60)        (86)        111
---------------------------------------------------------------------------------------------------------------------------------
    Earnings adjusted for noncash charges and credits                                                 382         746       1,484
Net change in:
  Trading assets                                                                                   (1,375)      1,003     (18,904)
  Trading liabilities                                                                               5,829      11,220       4,342
  Receivables and payables from securities transactions                                            (1,079)       (516)      1,096
  Other operating assets and liabilities, net                                                         (35)       (150)        100
Securities available for sale gains                                                                  (180)        (72)         --
Investment securities gains                                                                            --          --         (13)
---------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities                                                 3,542      12,231     (11,895)
---------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in:
  Interest-bearing deposits with banks                                                              1,194      (1,791)      1,422
  Federal funds sold                                                                                1,690      (2,183)         77
  Securities purchased under resale agreements                                                     (7,952)       (127)     (2,909)
  Securities borrowed                                                                                  (2)     (3,260)        229
  Loans                                                                                              (279)      3,225       1,191
Securities available for sale:
  Purchases                                                                                        (4,164)     (5,830)         --
  Maturities and other redemptions                                                                  3,875       2,947          --
  Sales                                                                                             1,871       2,201          --
Investment securities:
  Purchases                                                                                            --          --      (8,128)
  Maturities and other redemptions                                                                     --          --       6,462
  Sales                                                                                                --          --       1,134
Acquisitions of premises and equipment                                                               (124)       (292)       (179)
Other, net                                                                                            (93)        (68)        (65)
---------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities                                                              (3,984)     (5,178)       (766)
---------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in:
  Deposits                                                                                            833       1,426      (2,059)
  Securities sold under repurchase agreements                                                        (678)     (8,297)      6,416
  Other short-term borrowings                                                                      (2,260)       (393)      7,555
Issuances of long-term debt                                                                         4,677       2,411       2,220
Repayments of long-term debt                                                                       (1,627)     (1,615)       (711)
Issuance of preferred stock of subsidiary                                                              --          --         247
Issuances of preferred stock                                                                          221         342          --
Redemptions of preferred stock                                                                         --        (205)       (250)
Purchases of treasury stock                                                                           (38)       (267)       (313)
Cash dividends paid                                                                                  (361)       (322)       (281)
Other, net                                                                                             34          23         200
---------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities                                                   801      (6,897)     13,024
---------------------------------------------------------------------------------------------------------------------------------
Net effect of exchange rate changes on cash                                                            (7)         79           3
---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH AND DUE FROM BANKS                                                               352         235         366
Cash and due from banks, beginning of year                                                          1,985       1,750       1,384
---------------------------------------------------------------------------------------------------------------------------------
Cash and due from banks, end of year                                                              $ 2,337     $ 1,985    $  1,750
---------------------------------------------------------------------------------------------------------------------------------
Interest paid                                                                                     $ 5,078     $ 3,737    $  3,098
---------------------------------------------------------------------------------------------------------------------------------
Income taxes paid, net                                                                            $   217     $   216    $    144
---------------------------------------------------------------------------------------------------------------------------------
Noncash investing activities:
Conversions of loans to other real estate and assets acquired in credit workouts                  $    24     $    73    $     68
  Exchanges of Chilean government bonds for annuity contracts                                          88          91          89
  Other                                                                                                --          32          --
---------------------------------------------------------------------------------------------------------------------------------
Total noncash investing activities                                                                $   112     $   196    $    157
---------------------------------------------------------------------------------------------------------------------------------
Noncash financing activity: conversion of debt to preferred stock                                 $   245     $    --    $     --
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The accompanying notes are an integral part of the financial statements.




                          BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 65
<PAGE>   35
NOTES TO FINANCIAL STATEMENTS                               

NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES

  Bankers Trust New York Corporation together with its subsidiaries (the
  "Corporation") is a global provider of a wide range of financial services. The
  accounting policies of the Corporation conform with generally accepted
  accounting principles and prevailing industry practices. The preparation of
  financial statements in conformity with generally accepted accounting
  principles requires management to make estimates and assumptions that affect
  the reported amounts of assets and liabilities and disclosure of contingent
  assets and liabilities at the balance sheet date, and the reported amounts of
  revenues and expenses during the reporting period. Actual results could differ
  from management's estimates. The following is a description of the significant
  accounting policies of the Corporation.

Principles of Consolidation

  The consolidated financial statements of the Corporation include Bankers Trust
  New York Corporation (the "Parent Company"), Bankers Trust Company and its
  subsidiaries ("BTCo") and all other significant, majority-owned subsidiaries,
  after elimination of material intercompany transactions and accounts. Other
  companies in which there is at least 20 percent ownership are accounted for in
  accordance with the equity method of accounting. These investments are
  reported in other assets and the related equity income or loss, as well as
  disposition gains and losses, is included in other noninterest revenue.

Resale and Repurchase Agreements; Securities Borrowed

  Resale and repurchase agreements are generally treated as collateralized
  financing transactions and are carried at the amounts at which the securities
  were initially acquired or sold. The Corporation generally takes possession of
  securities purchased under resale agreements, which are primarily U.S.
  government and federal agency securities, and other OECD country sovereign
  bonds, monitors their fair value and requests additional collateral when
  deemed appropriate.

     Securities borrowed that are cash collateralized are recorded at the amount
  of cash collateral deposited with the lender. The Corporation monitors its
  market exposure with respect to securities borrowed transactions daily and
  requests the return of excess collateral as required.

Trading Securities; Securities Available for Sale

  The Corporation designates securities as either trading or available for sale
  at the date of acquisition.

     Debt and marketable equity securities and money market instruments which
  are classified as trading assets and short trading positions which are
  classified as trading liabilities are carried at their fair values with the
  resulting gains and losses included in trading revenue.

     Securities available for sale, including applicable hedges, are valued at
  fair value with the resulting net unrealized gains or losses recorded in
  stockholders' equity as securities valuation allowance. Realized gains and
  losses, as well as the amortization of premiums and accretion of discounts,
  are recorded in earnings. The specific identification method is used to
  determine the cost of securities sold.

     Fair value is generally based on quoted market prices or broker or dealer
  price quotations.

Derivatives

  Swaps, futures contracts, forward commitments, options and other similar types
  of contracts and commitments based on either interest rates or foreign
  exchange rates, as well as equity and commodity derivatives, are traded by the
  Corporation and are carried at their fair values as either trading assets or
  trading liabilities. Fair values for derivatives are based on quoted market
  prices or pricing models which take into account current market and
  contractual prices of the underlying instruments, as well as time value and
  yield curve or volatility factors underlying the positions. Gains and losses
  resulting from these positions are included in trading revenue.

     In addition to its trading activities, the Corporation, as an end user,
  utilizes various types of derivative products (principally interest rate and
  currency swaps) to manage the interest rate, currency and other market risks
  arising from a number of categories of its assets and liabilities. Derivatives
  used to manage such risks must be designated as a hedge at their inception and
  must remain effective as a hedge throughout the hedge period. Revenue or
  expense pertaining to management of interest rate exposure is predominantly
  recognized over the life of the contract as an adjustment to interest revenue
  or expense. Realized gains and losses on hedges of equities classified as
  other assets are included in the carrying amounts of those assets and are
  ultimately recognized in income when those assets are sold. Derivatives are
  also used to manage the risks associated with securities available for sale.
  These derivatives are carried at fair value with the resulting net unrealized
  gains and losses recorded in stockholders' equity as securities valuation
  allowance. The discount or premium on foreign exchange forward contracts and
  the interest on swaps used as hedges of net investments in foreign entities,
  as well as the net unrealized gains and losses from revaluing these contracts
  to the spot exchange rates, are recorded in stockholders' equity as cumulative
  translation adjustments.

Loans, Other Real Estate and Other Nonperforming Assets

  Loans generally are stated at their outstanding unpaid principal balances net
  of any deferred fees on originated loans, or unamortized premiums or discounts
  on purchased loans. Interest income is accrued on the unpaid principal
  balance. Loan origination fees are deferred and recognized as an adjustment of
  the yield (interest income) of the related loans.

     Generally, when a loan is in default as to payment of principal or interest
  for 90 days or when, in the judgment of management,



66 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   36
  the accrual of interest should be ceased before 90 days, it is the
  Corporation's policy to place such a loan on a "cash basis." In addition, all
  loans classified as doubtful and all partially charged-off loans are placed on
  a cash basis, even if the borrower is still making required payments. Any
  accrued but unpaid interest previously recorded on cash basis loans is
  reversed against current period interest revenue. Cash receipts of interest on
  cash basis loans are recorded as either revenue or a reduction of principal,
  according to management's judgment as to the collectibility of principal.

     Renegotiated loans are those which have been renegotiated to an effective
  interest rate lower than the then-current market rate because of a
  deterioration in the financial position of the borrower. Interest on such
  loans is accrued at the renegotiated rate.

     Other real estate and other assets acquired in credit work-outs, are
  recorded at the lower of fair value or the recorded investment in the related
  loan and are classified as other assets. Any excess of the recorded investment
  in the loan over the fair value of the asset acquired is accounted for as a
  charge to the allowance for credit losses.

     On January 1, 1995, the Corporation adopted Statement of Financial
  Accounting Standards ("SFAS") 114, "Accounting by Creditors for Impairment of
  a Loan" as amended by SFAS 118, "Accounting by Creditors for Impairment of a
  Loan -- Income Recognition and Disclosures." Under SFAS 114, a loan is
  classified as in-substance foreclosure when physical possession of the
  collateral has been taken regardless of whether formal foreclosure proceedings
  have taken place. As a result, during the first quarter of 1995, loans
  previously classified as other real estate but for which the Corporation had
  not taken possession of the collateral were transferred to cash basis loans.
  This reclassification did not impact the Corporation's financial condition or
  results of operations.

Allowance For Credit Losses

  The allowance for credit losses is available for credit losses arising from
  the Corporation's portfolio which is comprised of loans, credit-related
  commitments, derivatives and other financial instruments. Whenever the Credit
  Audit Department determines that the probability of loss is greater than 50
  percent, a charge-off of the amount deemed uncollectible is recommended to the
  Audit Committee of the Board. Subsequent recoveries, if any, are credited to
  the allowance.

     Included in the allowance for credit losses is a valuation allowance for
  impaired loans as required by SFAS 114. Under SFAS 114, a loan is impaired
  when, based on current information and events, it is probable that a creditor
  will be unable to collect all amounts due according to the loan's contractual
  terms. Impairment is measured based on the present value of expected future
  cash flows discounted at the loan's effective interest rate, or the loan's
  observable market price or the fair value of the collateral if the loan is
  collateral dependent.

     A multitude of complex and changing factors are collectively weighed by
  management in determining the adequacy of the allowance. These factors include
  management's review of the extent of existing risks in the portfolio and of
  prevailing economic conditions, regular examinations and evaluations of the
  quality of the portfolio by the Credit Audit Department and by the bank
  regulatory authorities, and the actual loss experience and the level of the
  allowance. Assessing the adequacy of the allowance for credit losses is
  inherently subjective as it requires making material estimates, including the
  amount and timing of future cash flows expected to be received on impaired
  loans, that may be susceptible to significant change. In the opinion of
  management, the allowance, when taken as a whole, is adequate to absorb
  reasonably estimated credit losses inherent in the Corporation's entire
  portfolio.

Premises and Equipment

  Premises and equipment owned are stated at cost less accumulated depreciation
  and amortization. Depreciation is computed using the straight-line method
  over the estimated useful lives of the assets. Leasehold improvements are
  amortized on a straight-line basis over the terms of the leases or the
  estimated useful lives of the improvements, whichever are shorter. Maintenance
  and repairs are charged to expense and improvements are capitalized. Gains and
  losses on dispositions are generally reflected in earnings.

     Leased properties meeting certain criteria are capitalized and amortized
  using the straight-line method over the terms of the leases.

Insurance Revenue and Expense

  For the Corporation's life insurance subsidiaries, premiums are recognized as
  revenue over the premium paying period of the related disability, annuity and
  other life insurance policies and are included in other noninterest revenue.
  Liabilities for future insurance benefits and the related provision for
  policyholder benefits reflect the present value of actuarially determined
  obligations net of future premiums. The liabilities for future benefits are
  included in other liabilities and the provision for benefits is included in
  other noninterest expenses.

Income Taxes

  The Corporation recognizes the current and deferred tax consequences of all
  transactions that have been recognized in the financial statements using the
  provisions of the enacted tax laws. Deferred tax assets and liabilities are
  recognized for the estimated future tax effects of temporary differences. The
  amount of deferred tax assets is reduced, if necessary, to the amount that,
  based on available evidence, will more likely than not be realized.

Deferred Stock Awards

  The Corporation records its obligations under outstanding deferred stock
  awards in stockholders' equity as common stock issuable-stock awards. The
  related deferred compensation is also included


                          BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 67
<PAGE>   37
  in stockholders' equity. These classifications are based upon the
  Corporation's intent to settle these awards with its common stock.

Statement of Cash Flows

  For purposes of the consolidated statement of cash flows, the Corporation's
  cash and cash equivalents are cash and due from banks. Net cash flows from
  instruments such as futures, forwards, options and swaps used to hedge assets
  or liabilities are classified as cash flows from operating activities.

     The Corporation reports the cash flows from loans made to customers and
  principal collected on loans, as well as from interest-bearing deposits
  accepted and repaid by its bank subsidiaries, on a net basis. Since the gross
  cash flows from the Corporation's nonbank subsidiaries' loans and
  interest-bearing deposits are not significant to the consolidated statement,
  such cash flows are also reported on a net basis.

Reclassifications

  Certain prior period amounts have been reclassified to conform to the current 
  presentation.

NOTE 2 -- CHANGES IN ACCOUNTING PRINCIPLES

Loan Impairment

  On January 1, 1995, the Corporation adopted SFAS 114. This statement, as
  amended by SFAS 118, requires the creation of a valuation allowance for
  impaired loans based on one of the following: the present value of expected
  future cash flows discounted at the loan's effective interest rate, the loan's
  observable market price or the fair value of the collateral if the loan is
  collateral dependent. Under SFAS 114, a loan is impaired when, based on
  current information and events, it is probable that a creditor will be unable
  to collect all amounts due according to the loan's contractual terms. At
  December 31, 1995, adoption of this standard resulted in a $90 million
  allocation of the existing allowance for credit losses to a specific valuation
  allowance for impaired loans.

     Additionally, under SFAS 114, a loan is classified as in-substance
  foreclosure when physical possession of the collateral has been taken
  regardless of whether formal foreclosure proceedings have taken place. As a
  result, during the first quarter of 1995, loans previously classified as other
  real estate but for which the Corporation had not taken possession of the
  collateral have been transferred to cash basis loans.

Offsetting of Amounts Related to Certain Repurchase and Reverse Repurchase 
Agreements

  During the fourth quarter of 1994, the Corporation adopted FIN 41, "Offsetting
  of Amounts Related to Certain Repurchase and Reverse Repurchase Agreements."
  FIN 41 allows the netting, under certain circumstances, of certain repurchase
  and reverse repurchase agreements. It was the Corporation's former policy to
  record such transactions on a gross basis on the balance sheet. As the result
  of this adoption, at December 31, 1994, the Corporation's consolidated total
  assets and total liabilities each decreased by approximately $500 million.

Offsetting of Amounts Related to Certain Contracts

  On January 1, 1994, the Corporation adopted FIN 39, "Offsetting of Amounts
  Related to Certain Contracts." FIN 39 requires that unrealized gains and
  losses on swaps, forwards, options and similar contracts be recognized as
  assets and liabilities, except where such gains and losses arise from
  contracts covered by qualifying master netting agreements. It was the
  Corporation's former policy to record such unrealized gains and losses on a
  net basis on the balance sheet. As the result of this adoption, at December
  31, 1994, the Corporation's consolidated total assets and total liabilities
  each increased by approximately $12 billion.

Securities Available for Sale

  Effective December 31, 1993, the Corporation adopted SFAS 115, "Accounting For
  Certain Investments in Debt and Equity Securities." As the result of this
  adoption, the Corporation recorded a credit of $145 million ($88 million on an
  after-tax basis) in stockholders' equity as securities valuation allowance.
  The adoption of SFAS 115 had no effect on net income.

Postretirement and Postemployment Benefits

  On January 1, 1993, the Corporation adopted SFAS 106, "Employers' Accounting
  for Postretirement Benefits Other Than Pensions" and SFAS 112, "Employers'
  Accounting for Postemployment Benefits." As the result of this adoption, the
  Corporation recorded charges of $100 million and $7 million, respectively, (or
  $70 million and $5 million, respectively, net of income taxes) as the
  cumulative effects of these changes in accounting principles.

NOTE 3 -- TRADING ASSETS AND TRADING LIABILITIES

  The components of these accounts, which are carried at fair value, were as
  follows:

<TABLE>
<CAPTION>
  (in millions) December 31,                                     1995       1994
  ------------------------------------------------------------------------------
<S>                                                           <C>       <C>    
  TRADING ASSETS
  U.S. government and agency securities                       $10,630   $10,974
  Obligations of U.S. states and political subdivisions           393       179
  Foreign government securities                                 9,681     8,359
  Corporate debt securities                                     5,648     5,571
  Equity securities                                             5,098     3,850
  Bankers acceptances and certificates of deposit               1,572     1,316
  Swaps, options and other derivative contracts (1)            10,555    14,071
  Other                                                         4,316     3,194
  ------------------------------------------------------------------------------
  Total trading assets                                        $47,893   $47,514
  ==============================================================================
  TRADING LIABILITIES
  Securities sold, not yet purchased
    U.S. government and agency securities                     $ 7,987   $ 4,159
    Obligations of U.S. states and political subdivisions           7        --
    Foreign government securities                               3,098     2,751
    Equity securities                                           3,262     2,298
    Other                                                         473       174
  Swaps, options and other derivative contracts (1)            11,264    11,567
  ------------------------------------------------------------------------------
  Total trading liabilities                                   $26,091   $20,949
  ==============================================================================
</TABLE>
 
  (1) Comprised of fair values of interest rate instruments, foreign exchange
      rate instruments, and equity and commodity instruments, reduced by the
      effects of master netting agreements, in accordance with FIN 39.



68 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   38
     Securities sold, not yet purchased are recorded as liabilities on the
  balance sheet and have off-balance sheet market risk to the extent that the
  Corporation, in satisfying this obligation, may have to purchase securities at
  a higher market price than that recorded on the balance sheet.

NOTE 4 -- SECURITIES AVAILABLE FOR SALE; INVESTMENT SECURITIES

  The fair value, amortized cost, and gross unrealized holding gains and
  losses for the Corporation's securities available for sale follow:

<TABLE>
<CAPTION>
  (in millions) December 31,                                         1995                         
  ---------------------------------------------------------------------------------------------
                                                                     Gross                         
                                                                Unrealized Holding    
                                                       Fair     ------------------    Amortized  
                                                      Value     Gains    (Losses)          Cost    
  ---------------------------------------------------------------------------------------------
<S>                                                 <C>       <C>        <C>          <C>       
  Debt securities
    U.S. government and agencies                    $   431   $     2    $    (5)       $   434   
    States of the U.S. and political subdivisions     1,387        66        (56)         1,377   
    Asset-backed                                      1,198         4         (6)         1,200   
    Foreign governments                               1,669        14        (11)         1,666   
    Corporate debt                                    1,179        13        (17)         1,183   
    Mortgage-backed                                       9        --         --              9   
  Equity securities                                     410        83         (8)           335   
  ---------------------------------------------------------------------------------------------
  Total securities available for sale                $6,283   $   182    $  (103)       $ 6,204   
  =============================================================================================
</TABLE>

<TABLE>                                           
<CAPTION>                                         
  (in millions) December 31,                                         1994                          
  ---------------------------------------------------------------------------------------------
                                                                     Gross                        
                                                              Unrealized Holding     
                                                       Fair   ------------------      Amortized
                                                      Value     Gains    (Losses)          Cost     
  ---------------------------------------------------------------------------------------------        
<S>                                                 <C>       <C>        <C>          <C>               
  Debt securities                                                                                     
    U.S. government and agencies                    $   893   $     8    $   (19)       $   904           
    States of the U.S. and political subdivisions     2,249        75        (46)         2,220           
    Asset-backed                                      1,447         4         (4)         1,447           
    Foreign governments                               1,469        37        (11)         1,443           
    Corporate debt                                    1,000        21        (14)           993           
    Mortgage-backed                                      --        --         --             --           
  Equity securities                                     417       125         (7)           299           
  ---------------------------------------------------------------------------------------------
  Total securities available for sale               $ 7,475   $   270    $  (101)       $ 7,306
  =============================================================================================                      
</TABLE>

<TABLE>
<CAPTION>
  (in millions) December 31,                                          1993
  ---------------------------------------------------------------------------------------------
                                                                      Gross
                                                                Unrealized Holding
                                                        Fair    ------------------    Amortized
                                                       Value     Gains     (Losses)        Cost
  ---------------------------------------------------------------------------------------------
<S>                                                   <C>      <C>        <C>         <C>
  Debt securities
    U.S. government and agencies                      $1,091   $    33    $   (36)      $ 1,094
    States of the U.S. and political
      subdivisions                                     1,561       125        (59)        1,495
    Asset-backed                                       1,105         3         --         1,102
    Foreign governments                                1,305        17         --         1,288
    Corporate debt                                     1,667        32        (30)        1,665
  Equity securities                                      344        98         (8)          254
  ---------------------------------------------------------------------------------------------
  Total securities available for sale                 $7,073   $   308    $  (133)      $ 6,898
  =============================================================================================
</TABLE>                                            

     Except for U.S. government and agencies, there were no securities of any
  individual issuer included in securities available for sale that exceeded 10
  percent of the Corporation's total stockholders' equity at December 31, 1995.

     The components of securities available for sale gains as reported in the
  consolidated statement of income follow:

<TABLE>
<CAPTION>
  (in millions) Year Ended December 31,                       1995         1994
  -----------------------------------------------------------------------------
<S>                                                          <C>          <C>  
  Debt securities -- gross realized gains                    $  28        $  43
  Debt securities -- gross realized losses                     (27)         (39)
  Equity securities -- net realized gains                      179           68
  -----------------------------------------------------------------------------
  Total securities available for sale gains                  $ 180        $  72
  =============================================================================
</TABLE>

     The components of investment securities gains as reported in the
  consolidated statement of income follow:

<TABLE>
<CAPTION>
  (in millions) Year Ended December 31,                                    1993
  ------------------------------------------------------------------------------
<S>                                                                        <C> 
  Debt securities -- gross realized gains                                  $  7
  Debt securities -- gross realized losses                                   (5)
  Equity securities -- net realized gains                                    11
  -----------------------------------------------------------------------------
  Total investment securities gains                                        $ 13
  =============================================================================
</TABLE>

     The following table shows the fair value, remaining maturities, approximate
  weighted average yields (based on amortized cost) and total amortized cost by
  maturity distribution of the debt components of the Corporation's securities
  available for sale at December 31, 1995.

<TABLE>
<CAPTION>
  --------------------------------------------------------------------------------------------------------------------------------
                                                                   Maturity Distribution
                                    ----------------------------------------------------------------------------------------------
                                                      After One       After Five
                                        Within        But Within      But Within        After          Mortgage
                                       One Year       Five Years      Ten Years       Ten Years         Backed            Total
  --------------------------------------------------------------------------------------------------------------------------------
  ($ in millions)                   Amount  Yield   Amount  Yield   Amount  Yield   Amount  Yield   Amount   Yield   Amount  Yield
  --------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>     <C>      <C>     <C>     <C>
  U.S. government and agencies      $   85   5.47%  $  330   5.52%  $   --     --%    $ 16   9.82%    $ --      --%  $  431   5.67%
  States of the U.S. and political
    subdivisions                       492   5.90      278   4.38      400   5.60      217   6.34       --      --    1,387   5.56
  Asset-backed securities               10   6.87      557   5.98      283   5.89      348   6.57       --      --    1,198   6.13
  Foreign government securities        635  10.94      575   7.09      268   7.61      191   7.69       --      --    1,669   8.71
  Corporate debt                       250   5.94      719   5.93      119   7.14       91   7.50       --      --    1,179   6.18
  Mortgage-backed                       --     --       --     --       --     --       --     --        9   13.56        9  13.56
  --------------------------------------------------------------------------------------------------------------------------------
  Total fair value                  $1,472          $2,459          $1,070            $863            $  9           $5,873
  ========================================          ======          ======            ====            ====           ======      
  Total amortized cost              $1,472          $2,475          $1,065            $848            $  9           $5,869
  ========================================          ======          ======            ====            ====           ======  
</TABLE>



                          BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 69
<PAGE>   39
NOTE 5 -- LOANS

     The following table summarizes the composition of loans at the end of each
  of the last five years:

<TABLE>
<CAPTION>
  -------------------------------------------------------------------------------------------------------------------------------
  ($ in millions) December 31,              1995                1994                1993               1992                1991
  -------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>        <C>      <C>         <C>     <C>        <C>     <C>         <C>     <C>        <C>
  Domestic
    Commercial and industrial       $ 2,520     20%     $ 2,218      18%    $ 2,794     18%    $ 3,727      21%    $ 4,074     24%
    Financial institutions            1,778     14        2,221      17       3,210     21       4,544      26       3,020     18
    Real estate
       Construction                     154      1          234       2         245      2         261       2         405      2
       Mortgage                       1,276     10        1,126       9       1,550     10       1,625       9       1,499      9
    Other                             1,442     11        1,044       8       1,780     12       1,312       8       1,247      7
  -------------------------------------------------------------------------------------------------------------------------------
  Total domestic                      7,170     56        6,843      54       9,579     63      11,469      66      10,245     60
  -------------------------------------------------------------------------------------------------------------------------------
  International
    Governments and official
       institutions                     227      2          184       2         456      3       1,316       8       1,709     10
    Banks and other financial
       institutions                   1,543     13        2,994      24       1,935     12       1,076       6         973      5
    Commercial and industrial         1,934     15        1,428      11       1,721     11       1,930      11       2,409     14
    Real estate
       Construction                       2     --            2      --           2     --          18      --         161      1
       Mortgage                         176      1          138       1         261      2         394       2         465      3
    Other                             1,701     13        1,014       8       1,346      9       1,212       7       1,175      7
  -------------------------------------------------------------------------------------------------------------------------------
  Total international                 5,583     44        5,760      46       5,721     37       5,946      34       6,892     40
  -------------------------------------------------------------------------------------------------------------------------------
  Gross loans                        12,753    100%      12,603     100%     15,300    100%     17,415     100%     17,137    100%
                                               ---                  ---                ---                 ---                ---
  Less: unearned income                 120                 102                 100                 97                  90
  -----------------------------------------             -------             -------            -------             -------
  Total loans                       $12,633             $12,501             $15,200            $17,318             $17,047
  =========================================             =======             =======            =======             =======
</TABLE>

     On a global basis, the commercial and industrial category and the "other"
  category included no single industry group with aggregate borrowings from the
  Corporation in excess of 10 percent of the total loan portfolio at December
  31, 1995.

     The following table shows certain maturity information for the
  Corporation's loans at December 31, 1995, excluding 1-4 family mortgages,
  installment loans and lease financing:

<TABLE>
<CAPTION>
                                                 Remaining Maturity
  ------------------------------------------------------------------------------
                                         Within    After One     After
                                            One   But Within      Five
  (in millions)                            Year   Five Years     Years     Total
  ------------------------------------------------------------------------------
<S>                                      <C>      <C>            <C>     <C>    
  Domestic
    Commercial and industrial            $  682       $1,192     $ 646   $ 2,520
    Financial institutions                1,498          263        17     1,778
    Real estate
      Construction                           33          121        --       154
      Mortgage                              340          437       289     1,066
    Other                                 1,082          143         3     1,228
  ------------------------------------------------------------------------------
  Total domestic                          3,635        2,156       955     6,746
  International                           4,112          430       840     5,382
  ------------------------------------------------------------------------------
  Total                                  $7,747       $2,586    $1,795   $12,128
  ------------------------------------------------------------------------------
  Loans due after one year  
    With predetermined interest rates                 $  618    $  987
  ------------------------------------------------------------------------------
    With floating or adjustable
      interest rates                                  $1,968    $  808
  ==============================================================================
</TABLE>

Cash Basis Loans and Renegotiated Loans

     The Corporation's cash basis loans and renegotiated loans are summarized as
  follows:

<TABLE>
<CAPTION>
  (in millions) December 31,                                    1995        1994
  ------------------------------------------------------------------------------
<S>                                                             <C>         <C> 
  Cash basis loans                                
    Domestic                                                    $570        $618
    International                                                174         378
  ------------------------------------------------------------------------------
  Total cash basis loans                                        $744        $996
  ------------------------------------------------------------------------------
  Renegotiated loans                              
    Domestic                                                    $100        $ 66
    International                                                 --          --
  ------------------------------------------------------------------------------
  Total renegotiated loans                                      $100        $ 66
  ==============================================================================
</TABLE>
                                      
     At December 31, 1995 and 1994, the Corporation had commitments to make
  additional loans to borrowers on a cash basis or renegotiated status of $27
  million and $4 million, respectively.



70 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   40
     The following table sets forth the approximate effect on interest revenue
  of cash basis loans and renegotiated loans. This disclosure reflects the
  interest on loans which were carried on the balance sheet and classified as
  either cash basis or renegotiated at December 31 of each year. The rates used
  in determining the gross amount of interest which would have been recorded at
  the original rate were not necessarily representative of current market rates.

<TABLE>
<CAPTION>
  (in millions) Year Ended December 31,                1995       1994      1993
  ------------------------------------------------------------------------------
  <S>                                                  <C>        <C>       <C> 
  Domestic loans                                                        
    Gross amount of interest that would                                 
       have been recorded at original rate              $64        $52       $56
    Less, interest, net of reversals,                                   
       recognized in interest revenue                    13          3         8
  ------------------------------------------------------------------------------
  Reduction of interest revenue                          51         49        48
  ------------------------------------------------------------------------------
  International loans                                                   
    Gross amount of interest that would                                 
       have been recorded at original rate               15         27        29
    Less, interest, net of reversals,                                   
       recognized in interest revenue                    --          4        22
  ------------------------------------------------------------------------------
  Reduction of interest revenue                          15         23         7
  ------------------------------------------------------------------------------
  Total reduction of interest revenue                   $66        $72       $55
  ==============================================================================
</TABLE>
                                                                  

     On January 1, 1995, the Corporation adopted SFAS 114. This statement, as
  amended by SFAS 118, requires the creation of a valuation allowance for
  impaired loans. A loan is impaired when, based on current information and
  events, it is probable that a creditor will be unable to collect all amounts
  due according to the loan's contractual terms. At December 31, 1995, the
  recorded investment in loans that was considered to be impaired under SFAS 114
  was $844 million which consisted of total cash basis loans and renegotiated
  loans. Included in this amount was $458 million of loans which required a
  valuation allowance of $90 million. The average recorded investment in
  impaired loans during the year ended December 31, 1995 was approximately $951
  million. For the year ended December 31, 1995, the Corporation recognized
  interest income on impaired loans of $13 million, using the cash basis method
  of income recognition described above and in Note 1. Also as a result of the
  adoption of SFAS 114, $35 million of in-substance foreclosed properties were
  transferred from other real estate to cash basis loans.

NOTE 6 -- ALLOWANCE FOR CREDIT LOSSES

  An analysis of the changes in the Corporation's allowance for credit losses
  follows:

<TABLE>
<CAPTION>
  (in millions) Year Ended December 31,           1995          1994        1993
  ------------------------------------------------------------------------------
<S>                                             <C>           <C>         <C>   
  Balance, beginning of year                    $1,252        $1,324      $1,620
  ------------------------------------------------------------------------------
  Net charge-offs                               
    Charge-offs                                    330           168         460
    Recoveries                                      39            71          71
  ------------------------------------------------------------------------------
      Total net charge-offs                        291            97         389
  Provision for credit losses                       31            25          93
  ------------------------------------------------------------------------------
  Balance, end of year                          $  992        $1,252      $1,324
  ==============================================================================
</TABLE>

NOTE 7 -- PREMISES AND EQUIPMENT; LEASES 

  An analysis of premises and equipment follows:

<TABLE>
<CAPTION>
  (in millions) December 31,                                    1995        1994
  ------------------------------------------------------------------------------
<S>                                                           <C>         <C>   
  Land                                                        $   73      $   73
  Buildings                                                      321         313
  Leasehold improvements                                         342         311
  Furniture and equipment                                        974         908
  Property leased under capital leases                    
     Land and buildings                                           76          76
     Equipment                                                     3           3
  Construction-in-progress                                        14          24
  ------------------------------------------------------------------------------
  Total                                                        1,803       1,708
  Less, accumulated depreciation and amortization                907         793
  ------------------------------------------------------------------------------
  Net book value                                              $  896      $  915
  ==============================================================================
</TABLE>

     Included in accumulated depreciation and amortization was accumulated
  amortization related to capital leases of $28 million and $26 million at
  December 31, 1995 and 1994, respectively.

     The Corporation is a lessee under lease agreements covering real property
  and equipment. Certain leases contain purchase or bargain renewal options. On
  January 24, 1996, BTCo closed on the purchase of One Bankers Trust Plaza
  which, at December 31, 1995, was classified as property leased under capital
  leases. Due to this purchase the future minimum lease payments under the
  Corporation's capital leases are minimal.

     The future minimum lease payments required under the Corporation's
  noncancelable operating leases at the end of 1995 were as follows:

<TABLE>
<CAPTION>
  (in millions) December 31,                                               1995
  ----------------------------------------------------------------------------- 
<S>                                                                        <C> 
  1996                                                                     $ 65
  1997                                                                       61
  1998                                                                       55
  1999                                                                       54
  2000                                                                       52
  2001 and later                                                            191
  ----------------------------------------------------------------------------- 
  Total minimum lease payments                                             $478*
  ----------------------------------------------------------------------------- 
</TABLE>
                                                 
  * Net minimum lease payments were $459 million after deducting minimum
    noncancelable sublease rentals of $19 million.

     The following shows the net rental expense for all operating leases:

<TABLE>
<CAPTION>
  (in millions) Year Ended December 31,           1995          1994        1993
  ------------------------------------------------------------------------------
<S>                                               <C>           <C>         <C>
  Gross rental expense                             $81           $87         $87
  Less, sublease rental income                       3             9           9
  ------------------------------------------------------------------------------
  Net rental expense                               $78           $78         $78
  ==============================================================================
</TABLE>

     For additional information on commitments and contingencies see "Legal
  Proceedings" on page 105.



                          BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 71
<PAGE>   41
NOTE 8 -- SECURITIES SOLD UNDER REPURCHASE AGREEMENTS AND OTHER SHORT-TERM 
          BORROWINGS

  Short-term borrowings are borrowed funds generally with an original maturity
  of one year or less. Debt instruments which contain a provision for early
  redemption, exercisable at the option of the security holder, are classified
  on the basis of the earliest possible redemption date.

     Securities sold under repurchase agreements and federal funds purchased
  generally mature in one day; commercial paper generally matures within 90
  days.

     The details of these borrowings for the years 1995, 1994 and 1993 are
  presented below:

<TABLE>
<CAPTION>
  ($ in millions)                                 1995          1994       1993
  -----------------------------------------------------------------------------
<S>                                               <C>        <C>        <C>    
  Securities sold under repurchase agreements
  Balance at year end                             $15,247    $15,617    $23,834
  Average amount outstanding                       21,543     21,814     23,772
  Maximum amount outstanding at
     any month end                                 28,212     28,409     28,575
  Average interest rate for the year                 5.44%      4.20%      3.64%
  Average interest rate on year-end balance          6.23%      5.34%      3.59%
  Federal funds purchased
  Balance at year end                             $ 4,658    $ 3,463    $ 5,242
  Average amount outstanding                        3,623      2,908      2,674
  Maximum amount outstanding at
     any month end                                  6,313      6,742      5,719
  Average interest rate for the year                 5.47%      3.37%      2.49%
  Average interest rate on year-end balance          5.07%      4.60%      2.50%
  Commercial paper
  Balance at year end                             $ 6,860    $ 8,009    $ 7,156
  Average amount outstanding                        7,022      7,387      5,415
  Maximum amount outstanding at
     any month end                                  8,239      9,378      7,156
  Average interest rate for the year                 6.25%      4.59%      3.65%
  Average interest rate on year-end balance          5.81%      5.38%      3.47%
  Other
  Balance at year end                             $ 4,243    $ 6,750    $ 6,594
  Average amount outstanding                        5,694      6,961      4,628
  Maximum amount outstanding at
     any month end                                  6,918      7,832      6,594
  Average interest rate for the year                 6.95%      6.57%      7.39%
  Average interest rate on year-end balance          7.45%      6.27%      5.76%
  -----------------------------------------------------------------------------
</TABLE>

     The Parent Company had standby lines of credit amounting to $500 million at
  December 31, 1995 with banks other than its subsidiaries to support its
  commercial paper outstanding. It has never been necessary for the Parent
  Company to activate these lines of credit.

NOTE 9 -- LONG-TERM DEBT

  Long-term debt is summarized as follows, based on the contractual terms of
  each issue:  

<TABLE>
<CAPTION>
                          Fixed Rate            Floating Rate      Dec. 31,   Dec. 31,
                     --------------------   ---------------------      1995       1994
  (in millions)      Senior  Subordinated    Senior  Subordinated     Total      Total
  ------------------------------------------------------------------------------------ 
<S>                  <C>     <C>             <C>     <C>           <C>        <C>   
  Parent Company
  Due in 1995          $ --       $    --   $    --          $ --    $   --     $  455
  Due in 1996           580           150        14            --       744        759
  Due in 1997            --           198        24            --       222        410
  Due in 1998           100            --       442            --       542        167
  Due in 1999            --           100        40           150       290        309
  Due in 2000            --           216       478            --       694        207
  Due in 2001-2005       15         1,065        16           458     1,554      1,293   
  Thereafter             --           414        --            --       414        388
  ------------------------------------------------------------------------------------
  Total                $695        $2,143    $1,014          $608    $4,460     $3,988
  ------------------------------------------------------------------------------------
  BTCo
  Due in 1995          $ --        $   --    $   --          $ --    $   --     $  488
  Due in 1996            --            --       564            --       564        845
  Due in 1997            --            25     1,099            --     1,124        287
  Due in 1998            --            28       280            --       308         97
  Due in 1999            --             7        92            --        99        115
  Due in 2000            --             7     1,464            --     1,471         18   
  Due in 2001-2005       --            30       508            --       538        153
  Thereafter             --            --       168            --       168         70
  ------------------------------------------------------------------------------------
  Total                $ --        $   97    $4,175          $ --    $4,272     $2,073
  ------------------------------------------------------------------------------------
  BT Securities Corporation
  Subordinated Notes due Feb. 1997 to Nov. 1999
    ($63 million at fixed rate at Dec. 1995)                         $  320     $  319
  Senior Floating Rate Note due Sept. 1998                              200         --
  Bankers Trust (Delaware)
  Zero Coupon Bank Notes due Dec. 1996                                   42         75
  ------------------------------------------------------------------------------------
  Total long-term debt                                               $9,294     $6,455
  ====================================================================================
</TABLE>

     Based solely on the contractual terms of the debt issues, at December 31,
  1995 and 1994 the Corporation's total fixed rate long-term debt had a weighted
  average interest rate of 7.53 percent and 7.26 percent, respectively.

     The Corporation has entered into interest rate and currency swap agreements
  for many of its long-term debt issues, in order to manage its interest rate
  and currency risks.

     The interest rates for the floating rate debt issues and the fixed rate
  debt issues effectively converted to floating are generally based on LIBOR,
  although in certain instances they are subject to minimum interest rates as
  specified in the agreements governing the respective issues.

     The weighted average effective interest rates for total long-term debt,
  including the effects of the related swap agreements, were 6.39 percent and
  6.23 percent at December 31, 1995 and 1994, respectively.

     Certain debt securities include covenants requiring the Parent Company,
  from time to time or at maturity, as appropriate, to issue common stock or
  other securities in an amount equal to the principal amount of the debt
  securities, in order to comply with bank regulations governing capital
  adequacy. In this regard, at December 31, 1995 and 1994, the Parent Company
  had dedicated $598 million of net proceeds from such issuances.



72 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   42
     At December 31, 1995 and 1994, certain subsidiaries of Bankers Trust
  Company had outstanding $2.94 billion and $626 million, respectively of
  mandatory redeemable preference securities as included in the table above.
  Maturities at December 31, 1995 range from September 1996 to December 2003 and
  maturities at December 31, 1994 range from September 1996 to December 1996.

NOTE 10 -- PREFERRED STOCK OF SUBSIDIARY

  On January 22, 1993, BT Overseas Finance N. V. ("BTOF"), an indirect,
  wholly-owned subsidiary of the Parent Company authorized to issue 10,000
  preferred shares, $.01 par value, issued $250 million, or 2,500 shares, of
  Auction Rate Cumulative Preferred Stock in four series of 625 shares each --
  Series A-D ("BTOF Preferred"). The BTOF Preferred has contingent voting rights
  and a liquidation preference of $100,000 per share, plus accrued and unpaid
  dividends. Each of the four series is identical, except that dividend rates
  and dividend payment dates vary and separate auctions on different auction
  dates are held for each series.

     The shares of each series of BTOF Preferred are redeemable, in whole but
  not in part, except under certain circumstances, at the option of BTOF at a
  redemption price of $100,000 per share, plus accrued and unpaid dividends to
  the date of redemption.

     Dividends on each series of BTOF Preferred are cumulative and payable
  generally every 28 days at a rate per annum determined by auction. The rate
  for any dividend period is subject to a minimum rate, in certain
  circumstances, based upon the "AA" Corporate Commercial Paper Rate and a
  maximum rate based upon selected short and long-term U.S. Treasury securities
  as determined at the particular auction date. For the years ended December 31,
  1995 and 1994, the composite average dividend rates on the four series of BTOF
  Preferred were 6.14 percent and 4.32 percent, respectively. At December 31,
  1995 and 1994, the composite average dividend rates were 6.06 percent and 6.44
  percent, respectively.

     In addition, BTOF and the Parent Company entered into an agreement pursuant
  to which the Parent Company agreed to sell to BTOF, upon BTOF's exercise of
  its right to purchase, 2,500 shares (in four series of 625 shares) of the
  Parent Company's Auction Rate Cumulative Preferred Stock, Series K-N
  ("Exchange Preferred"). BTOF and the Parent Company also agreed that BTOF will
  purchase and exchange the Exchange Preferred for BTOF Preferred, upon the
  Parent Company's exercise of its right to cause such for one or more series,
  or upon the occurrence of certain other events, in whole but not in part. The
  purchase price of the Exchange Preferred in either case is $100,000 per share.
  The Exchange Preferred Stock has terms identical to the BTOF Preferred, except
  that the Parent Company can redeem the Exchange Preferred in whole or in part,
  the dividend periods are generally 49 days and the maximum rate for any
  dividend period under no circumstances will exceed 24 percent per annum.

NOTE 11 -- PREFERRED STOCK SERIES PREFERRED STOCK

  The Parent Company is authorized to issue 10 million shares of Series
  Preferred Stock, without par value. All shares of Series Preferred Stock
  constitute one and the same class and have equal rank and priority over common
  stockholders as to dividends and in the event of liquidation. Each series of
  Series Preferred Stock has a liquidation preference per share (as indicated
  below), plus accrued and unpaid dividends, as well as contingent voting
  rights. The Series Preferred Stock outstandings were as follows:

<TABLE>
<CAPTION>
  ($ in millions) December 31,                                  1995        1994
  ------------------------------------------------------------------------------
<S>                                                             <C>         <C> 
  Series J, Outstanding: 447,225 shares                         $ 45        $ 45
  Series Q, Outstanding: 80,000 shares                           200         200
  Series R, Outstanding: 60,000 shares                           150         150
  Series I, Outstanding: 1,000,000 shares                        100          --
  Series O, Outstanding: 589,268 shares                          147          --
  Series P, Outstanding: 98,320 shares                            98          --
  Series S, Outstanding: 50,000 shares                           125          --
  ------------------------------------------------------------------------------
  Total preferred stock                                         $865        $395
  ==============================================================================
</TABLE>

Series C Junior Participating Preferred Stock

  The Parent Company has designated 1 million shares of the Series Preferred
  Stock as Series C Junior Participating Preferred Stock ("Series C"), which are
  issuable on the exercise of Preferred Share Purchase Rights pursuant to a
  Rights Agreement adopted by the Corporation in February 1988. See Note 12 for
  a more detailed discussion of this agreement. No Series C shares have ever
  been issued.

Fixed/Adjustable Rate Cumulative Preferred Stock, Series D and J

  On August 31, 1989, the Parent Company issued $250 million, or 5 million
  shares, of Fixed/Adjustable Rate Cumulative Preferred Stock, Series D
  (Liquidation Preference -- $50 per share) ("Series D"). On October 28, 1992,
  the Parent Company exchanged 447,225 shares of Fixed/Adjustable Rate
  Cumulative Preferred Stock, Series J (Liquidation Preference -- $100 per
  share) ("Series J") for 894,450 shares of its Series D amounting to
  $44,722,500 liquidation value. On September 1, 1994, the Corporation redeemed
  its remaining outstanding 4,105,550 shares, or $205,277,500 liquidation value,
  of the Series D Fixed/Adjustable Rate Cumulative Preferred Stock.

     At the option of the Parent Company, the Series J may be redeemed, in whole
  or in part, on or after December 1, 1995 and prior to December 1, 1997 at
  $103.00 per share and thereafter at $100.00 per share, plus accrued and unpaid
  dividends to the redemption date. However, these shares may be redeemed in
  whole earlier if the dividend rate is adjusted upwards as a result of an
  amendment to effect a change in the dividends exclusion percentage provisions
  of the Internal Revenue Code. Any optional redemption shall be with the
  approval of the Federal Reserve Board unless at that time that body should
  determine that its approval is not required.



                          BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 73
<PAGE>   43
     Dividends on the Series J are cumulative and payable quarterly on March 1,
  June 1, September 1 and December 1 of each year. The Series J dividend rate is
  fixed at 7.375 percent per annum prior to December 1, 1997. Thereafter, the
  dividend rate is determined by a formula that considers the interest rates of
  selected short- and long-term U.S. Treasury securities at the time the rate is
  set plus an incremental increase based on a relationship of the Parent
  Company's then current quarterly cash dividend declared on common stock and
  the last quarterly cash dividend paid on common stock prior to September 1,
  1997. The Series J adjustable rate in no event will be less than 7 percent or
  greater than 17 percent per annum. Both the fixed and adjustable rates may be
  subject to adjustment in the event of enactment of an amendment to effect a
  change in the dividends exclusion percentage provisions of the Internal
  Revenue Code. The dividend rate for the Series D was fixed at 8.72 percent per
  annum prior to redemption and the dividend payment dates were identical to
  Series J.

8.55% Cumulative Preferred Stock, Series I

  On March 23, 1992, Bankers Trust Company issued $100 million of 6.90%
  Subordinated Notes due March 1995 (the "Notes"). The Notes, which were
  guaranteed on a subordinated basis by the Parent Company, were issued as
  part of 4 million Preferred Purchase Units ("Units"). Each Unit consisted
  of a Note with a $25 principal amount, a subordinated guaranty by the
  Parent Company of such Note, and a preferred stock purchase contract (the
  "Purchase Contract") issued by the Parent Company. Holders of the Units
  were entitled to receive 8.55 percent per annum with respect to each Unit,
  payable quarterly, which consisted of the interest on the Notes and a
  contract fee in respect of the Purchase Contracts. On March 1, 1995, the
  Notes matured and, in accordance with the original terms of the Purchase
  Contracts, the holders of the Units were required to purchase 4 million
  depositary shares, at $25 per share, each representing a one-fourth
  interest in a share of the Parent Company's 8.55% Cumulative Preferred
  Stock, Series I (Liquidation Preference -- $100 per share) ("Series I").

     Dividends on the Series I are cumulative and payable quarterly on March 1,
  June 1, September 1 and December 1 of each year, commencing on June 1, 1995,
  at a fixed rate of 8.55 percent of the liquidation preference per annum.
  Shares of the Series I are not redeemable prior to March 1, 1997, when they
  will become redeemable at the Parent Company's option at $100 per share, plus
  an amount equal to accrued and unpaid dividends. Any optional redemption shall
  be with the approval of the Federal Reserve Board unless at that time that
  body should determine that its approval is not required.

Auction Rate Cumulative Preferred Stock, Series K, L, M and N

  The Parent Company, as part of an agreement with BTOF, holds in treasury
  Auction Rate Cumulative Preferred Stock in four series of 625 shares each --
  Series K, Series L, Series M and Series N (Liquidation Preference -- $100,000
  per share). See Note 10 for a more detailed discussion of this agreement.

7 5/8% Cumulative Preferred Stock, Series O

  On June 2, 1993, the Parent Company issued $150 million of 7 5/8% Convertible
  Capital Securities due June 2033. These debt securities were subordinated and
  could only be redeemed in whole but not in part, on or after June 1, 1998 at
  par, plus accrued and unpaid interest to the redemption date. On March 1,
  1995, the Parent Company reset the interest rate on the 7 5/8% Convertible
  Capital Securities to a rate of 6 1/8 percent per annum giving holders of this
  issue the right, at any time prior to redemption or maturity, to convert the
  debt securities into depositary shares, at $25 per share, each representing a
  one-tenth interest in a share of the Parent Company's 7 5/8% Cumulative
  Preferred Stock, Series O (Liquidation Preference -- $250 per share) ("Series
  O"). During 1995, holders of the Convertible Capital Securities converted
  their securities for approximately 5.9 million depositary receipts, each
  evidencing a depositary share representing a one-tenth interest in a share of
  the Corporation's Series O for a total amount of approximately $147 million.

     Dividends on the Series O are cumulative and payable quarterly on each
  March 1, June 1, September 1 and December 1, commencing with the date
  succeeding original issuance. Shares of Series O are redeemable at the Parent
  Company's option, in whole or in part, at $300 per share (or $30 per
  depositary share) on or before June 1, 1998 and thereafter at $250 per share
  (or $25 per depositary share), plus, in each case, accrued and unpaid
  dividends to the redemption date. Any optional redemption shall be with the
  approval of the Federal Reserve Board unless at that time that body should
  determine that its approval is not required.

7.50% Cumulative Preferred Stock, Series P

  On August 19, 1993, the Parent Company issued $100 million of 7.50%
  Convertible Capital Securities due August 2033. These debt securities were
  subordinated and could only be redeemed, in whole but not in part, on or after
  August 15, 1998 at par, plus accrued and unpaid interest to the redemption
  date. On May 15, 1995, the Parent Company reset the interest rate on the 7.50%
  Convertible Capital Securities to a rate of 6.00 percent per annum giving
  holders of this issue the right, at any time prior to redemption or maturity,
  to convert the debt securities into depositary shares, at $25 per share, each
  representing a one-fortieth interest in a share of the Parent Company's 7.50%
  Cumulative Preferred Stock, Series P (Liquidation Preference -- $1,000 per
  share) ("Series P"). During 1995, holders of the Convertible Capital
  Securities converted their securities for approximately 3.9 million depositary
  receipts, each evidencing a depositary share representing a one-fortieth
  interest in a share of the Corporation's Series P for a total amount of
  approximately $98 million.



74 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   44
     Dividends on the Series P are cumulative and payable quarterly on February
  15, May 15, August 15 and November 15, commencing with the date succeeding
  original issuance. Shares of Series P are redeemable at the Parent Company's
  option, in whole or in part, at $1,200 per share (or $30 per depositary share)
  on or before August 15, 1998 and thereafter at $1,000 per share (or $25 per
  depositary share), plus, in each case, accrued and unpaid dividends to the
  redemption date. Any optional redemption shall be with the approval of the
  Federal Reserve Board unless at that time that body should determine that its
  approval is not required.

Adjustable Rate Cumulative Preferred Stock, Series Q

  On March 28, 1994, the Parent Company issued $200 million, or 8 million
  depositary shares at $25 per share, each representing a one-hundredth interest
  in a share of Adjustable Rate Cumulative Preferred Stock, Series Q
  (Liquidation Preference -- $2,500 per share) ("Series Q"). At the option of
  the Parent Company, the Series Q may be redeemed, in whole or in part, on or
  after March 1, 1999, at $2,500 per share (or $25 per depositary share), plus,
  in each case, accrued and unpaid dividends to the redemption date. Any
  optional redemption shall be with the approval of the Federal Reserve Board
  unless at that time that body should determine that its approval is not
  required.

     Dividends on the Series Q are cumulative and payable quarterly on March 1,
  June 1, September 1 and December 1 of each year. The initial dividend rate was
  5.90 percent per annum for the dividend period ending on May 31, 1994.
  Thereafter, the dividend rate is determined by a formula that considers the
  interest rates of selected short- and long-term U.S. Treasury securities at
  the time the rate is set. In no event will the dividend rate be less than 
  4 1/2 percent or more than 10 1/2 percent per annum.

Adjustable Rate Cumulative Preferred Stock, Series R

  On August 22, 1994, the Parent Company issued $150 million, or 6 million
  depositary shares at $25 per share, each representing a one-hundredth interest
  in a share of Adjustable Rate Cumulative Preferred Stock, Series R
  (Liquidation Preference -- $2,500 per share) ("Series R"). At the option of
  the Parent Company, the Series R may be redeemed, in whole or in part, on or
  after September 1, 1999, at $2,500 per share (or $25 per depositary share),
  plus, in each case, accrued and unpaid dividends to the redemption date. Any
  optional redemption shall be with the approval of the Federal Reserve Board
  unless at that time that body should determine that its approval is not
  required.

     Dividends on the Series R are cumulative and payable quarterly on March 1,
  June 1, September 1 and December 1 of each year. The initial dividend rate was
  6.42 percent per annum for the dividend period ending on November 30, 1994.
  Thereafter, the dividend rate is determined by a formula that considers the
  interest rates of selected short- and long-term U.S. Treasury securities at
  the time the rate is set. In no event will the dividend rate be less than 4
  1/2 percent or more than 10 1/2 percent per annum.

7.75% Cumulative Preferred Stock, Series S 

  On June 30, 1995, the Corporation issued $125 million, or 5 million depositary
  shares at $25 per share, each representing a one-hundredth interest in a share
  of the Corporation's 7 3/4% Cumulative Preferred Stock, Series S (Liquidation
  Preference -- $2,500 per share) ("Series S").

     Dividends on the Series S are cumulative and payable quarterly on March 1,
  June 1, September 1 and December 1 of each year, commencing with the date
  succeeding original issuance. At the option of the Corporation, the Series S
  may be redeemed, in whole or in part, on or after June 1, 2000, at $2,500 per
  share (or $25 per depositary share), plus, in each case, accrued and unpaid
  dividends to the redemption date. Any optional redemption shall be with the
  approval of the Federal Reserve Board unless at that time that body should
  determine that its approval is not required.

SERIAL PREFERRED STOCK

  In 1990, stockholders voted in favor of an amendment to the Restated
  Certificate of Incorporation of Bankers Trust New York Corporation to increase
  the number of shares of authorized preferred stock from 10 million to 20
  million and created a new class of preferred stock called Serial Preferred
  Stock which would have equal rank as the Series Preferred Stock as well as
  priority over common stockholders as to dividends and in the event of
  liquidation. The Parent Company has decided to defer action on implementing
  this approved amendment at this time.

NOTE 12 -- PREFERRED SHARE PURCHASE RIGHTS

  On February 16, 1988, the Board of Directors of the Parent Company declared a
  dividend distribution of one Preferred Share Purchase Right ("Right") for each
  share of common stock held, payable February 26, 1988 to stockholders of
  record on that date. Rights also automatically attach to each share of common
  stock issued after February 26, 1988.

     Each Right entitles the record holder to purchase from the Parent Company a
  one-hundredth interest in a share of the Parent Company's Series C Junior
  Participating Preferred Stock at an exercise price of $140, subject to certain
  adjustments. The Rights will not be exercisable or transferable apart from the
  common stock until the 10th day after either a public announcement that a
  person or group (an "Acquiring Person") has acquired beneficial ownership of
  20 percent or more of the common stock, or the announcement or commencement of
  a tender offer for 20 percent or more of the common stock. If the Corporation
  is acquired or 50 percent or more of its consolidated assets or earning power
  are sold, each holder of a Right will have the right to receive, upon the
  exercise at the then current exercise price of the Right, that number of
  shares of common stock of the acquiring company which have a market value of
  two times the exercise price of the Right. If any person becomes an Acquiring
  Person (unless such person first acquires 20 percent or more of the
  outstanding common shares by a purchase pursuant to a tender offer for all of
  the common shares for cash, which purchase increases such person's 



                          BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 75
<PAGE>   45
  beneficial ownership to 80 percent or more of the outstanding common shares),
  each holder of a Right other than Rights beneficially owned by the Acquiring
  Person (which will be void), will have the right to receive upon exercise that
  number of common shares having a market value of two times the exercise price
  of the Right. The Rights will expire on February 26, 1998, but may be redeemed
  at any time prior to a person or group acquiring the beneficial ownership of
  20 percent or more of the common stock. Until a Right is exercised, the holder
  will have no rights as a stockholder of the Parent Company.

     After the acquisition by a person or group of beneficial ownership of 20
  percent or more of the outstanding common shares and prior to the acquisition
  by such person or group of 50 percent or more of the outstanding common
  shares, the Board of Directors of the Parent Company may exchange the Rights
  (other than Rights owned by such person or group), in whole or in part, at an
  exchange ratio of one common share, or a one-hundredth interest in a share of
  Series C Junior Participating Preferred Stock (or a share of a class or series
  of the Parent Company's preferred stock having equivalent rights, preferences
  and privileges), per Right (subject to adjustment).

     If issued, each share of Series C Junior Participating Preferred Stock will
  be entitled, subject to adjustment, to (i) a quarterly dividend of the greater
  of $1 per share or 100 times the quarterly dividend declared on each share of
  common stock, (ii) in the event of liquidation, dissolution or winding up, a
  preferential liquidation payment of the greater of $100 per share or 100 times
  the liquidation payment made per share of common stock, and (iii) 100 votes
  per share voting together with the holders of the Parent Company's common
  stock on all matters.

     Under certain conditions, the Rights will also be redeemed in connection
  with an acquisition of all of the Parent Company's common stock for cash in a
  transaction approved by the Parent Company's stockholders. Subject to certain
  specified conditions, a special meeting of the Parent Company's stockholders
  to vote on such a transaction will be called upon the request of a potential
  acquiror.

     These statements are qualified in their entirety by reference to the Rights
  Agreement, a copy of which was filed with the Securities and Exchange
  Commission.

NOTE 13 -- COMMON STOCK

  The purposes and number of shares of common stock issued, distributed from
  treasury and purchased for treasury during 1995, 1994 and 1993 were as
  follows:

<TABLE>
<CAPTION>
  Year Ended December 31,                          1995        1994        1993
  -----------------------------------------------------------------------------
<S>                                          <C>         <C>         <C>       
  Common shares outstanding,
    beginning of year                        78,069,266  80,602,534  82,873,988
  -----------------------------------------------------------------------------
  Shares issued or distributed under
    Employee Benefit Plans:
      1976 Stock Option Plan                         --       3,000       9,376
      1985 Stock Option and
        Stock Award Plan
          Stock options                         260,993     144,769     869,966
          Restricted stock awards, net               --     (12,619)    (25,664)
          Deferred stock awards                      --      15,829     204,827
      1991 Stock Option and
        Stock Award Plan
          Stock options                         367,728     274,864     591,776
          Restricted stock awards, net          (84,539)     (5,298)    231,671
          Deferred stock awards                 242,264       7,459          --
      1994 Stock Option and
        Stock Award Plan
          Stock options                           7,000          --          --
          Restricted stock awards, net          813,901     661,400          --
          Deferred stock awards                      --          --          --
  -----------------------------------------------------------------------------
  Total shares issued or distributed          1,607,347   1,089,404   1,881,952
  Shares purchased for treasury                (600,495) (3,622,672) (4,153,406)
  -----------------------------------------------------------------------------
  Common shares outstanding,
    end of year                            79,076,118    78,069,266  80,602,534
  =============================================================================
</TABLE>

     At December 31, 1995, common stock was reserved for issuance or
  distribution as follows:

<TABLE>
  -----------------------------------------------------------------------------
<S>                                                                  <C>      
  Dividend Reinvestment and Common Stock Purchase Plan                2,512,549
  Employee Benefit Plans
    PartnerShare (including ESOP shares)                              2,274,330
    1994 Stock Option and Stock Award Plan                           13,517,699
    1991 Stock Option and Stock Award Plan                            6,445,837
    1985 Stock Option and Stock Award Plan                            2,243,578
  -----------------------------------------------------------------------------
  Total                                                              26,993,993
  =============================================================================
</TABLE>

     At the Annual Meeting of Stockholders on April 19, 1994, the stockholders
  approved the 1994 Stock Option and Stock Award Plan (the "1994 Plan") which
  made available for grant, until April 21, 1998, 15 million common shares. The
  1994 Plan permits the granting of nonqualified and incentive stock options,
  restricted stock, deferred stock and other common stock-based awards
  (collectively, the "Awards"). Awards are still outstanding under the 1991
  Stock Option and Stock Award Plan (the "1991 Plan") and the 1985 Stock Option
  and Stock Award Plan (the "1985 Plan"). No further Awards will be granted
  under either the 1991 Plan, as of April 19, 1994 or the 1985 Plan, as of April
  16, 1991 or the 1976 Stock Option Plan. These plans are administered by a
  Committee of the Board of Directors (the "Committee"), none of whom is
  eligible to participate therein. The Committee determines whether, to what
  extent and under what circumstances the Awards may be settled in cash. Awards
  granted under these plans may be satisfied through the use of the Parent
  Company's authorized but 



76 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   46
  unissued shares or shares held in the Parent Company's treasury. The
  Corporation currently intends to satisfy the awards to be granted under the
  1994 Stock Option and Stock Award Plan and prior Stock Option and Stock Award
  Plans with treasury shares acquired through open market purchases and may
  purchase up to approximately 2 million shares during the remainder of 1996 for
  this purpose.

     Stock options are granted to purchase stock at a price not less than the
  fair market value on the date of grant and may be outstanding for any period
  up to 10 years and one day from the date of grant. Generally, no stock option
  may be exercised until the employee has remained in the continuous employ of
  the Corporation for one year after the option is granted.

     Stock Appreciation Rights ("SARs") entitled their holders, at the
  discretion of the Committee, to receive cash or stock equal to the excess of
  the fair market value on the date of exercise over the related option price.
  The exercise of SARs reduced the stock options otherwise exercisable;
  similarly, the exercise of stock options canceled the corresponding SARs. The
  Committee may permit delivery of the Parent Company's common shares already
  owned by the optionee in payment for the exercise of a stock option.

     The following is a summary of stock option and SAR transactions which
  occurred during 1993, 1994 and 1995:

<TABLE>
<CAPTION>
                                                                    Option Price
                              Options           SARs                   Per Share
  ------------------------------------------------------------------------------
<S>                        <C>                 <C>            <C>            
  December 31, 1992         5,471,043          6,364          $19.75   -$64.2813
    Granted                 2,132,000             --           70.4375 - 80.75  
    Exercised              (1,471,118)         (2,491)         19.75   - 56.75  
    Cancelled                 (39,991)         (3,873)
  ---------------------------------------------------
  December 31, 1993         6,091,934              --          19.75   - 80.75  
  ---------------------------------------------------
    Granted                 2,448,000              --          67.0625 - 70.25  
    Exercised                (422,633)             --          19.75   - 70.4375
    Cancelled                (314,653)             --
  ---------------------------------------------------
  December 31, 1994         7,802,648              --          27.0625 - 80.75  
  ---------------------------------------------------
    Granted                 2,648,500              --          62.1875 - 69.0625
    Exercised                (635,721)             --          27.0625 - 68.625
    Cancelled                (816,636)             --
  ---------------------------------------------------
  December 31, 1995         8,998,791              --          27.0625 - 80.75
  ---------------------------------------------------
  Exercisable at:
  December 31, 1994         5,358,148              --
  ---------------------------------------------------
  December 31, 1995         6,350,291              --
  ---------------------------------------------------
</TABLE>

     For options outstanding at December 31, 1995 and 1994, the average option
  price per share was $62.74 and $62.34, respectively, and the range of
  expiration dates was 1996 through 2005 and 1995 through 2004, respectively.

     Recipients of restricted stock have all the rights of a stockholder of the
  Corporation, except for limitations on sale or use of shares during the
  restriction period, generally three years. Restricted stock must be issued
  from treasury shares. The Committee determines all conditions of the awards,
  including whether to permit or require cash dividends to be deferred or
  reinvested.

     Deferred stock awards are the right to receive common stock of the
  Corporation at a specified future date. The awards vest from one to three
  years from the date of the award. For deferred stock awards, shares of stock
  are not distributed until after a specified deferral period extending up to
  five years from the vesting date. Prior to distribution, awards may earn
  amounts equivalent to quarterly dividends declared by the Corporation and may
  also earn the equivalent of the excess of quarterly earnings per common share
  over the cash dividends. At December 31, 1995 and 1994, there were deferred
  stock awards outstanding of 3,334,674 shares and 2,223,232 shares,
  respectively.

     After providing for stock options granted, restricted stock awards and
  deferred stock awards, there were 7,073,010 and 11,601,183 shares available
  for future grant under the 1994 Plan at December 31, 1995 and 1994,
  respectively.

NOTE 14 -- ASSET AND DIVIDEND RESTRICTIONS

  The Federal Reserve Act, as amended by the Monetary Control Act of 1980,
  requires that reserve balances on certain deposits of depository institutions
  be maintained at the Federal Reserve Bank. The reserve balances of the
  Corporation's subsidiary banks were $633 million and $622 million at December
  31, 1995 and 1994, respectively. For the years 1995 and 1994, the average
  reserve balances of these banks amounted to $199 million and $243 million,
  respectively.

     Assets, principally trading assets and securities available for sale, of
  approximately $5.394 billion at December 31, 1995 were pledged as collateral
  to secure public and trust deposits, for borrowings, and for other purposes.

     Federal law also requires that "covered transactions," as defined, engaged
  in by insured banks and their subsidiaries with certain affiliates, including
  the Parent Company, be at arm's length and limited to 20 percent of capital
  and surplus, as defined, and "covered transactions" with any one such
  affiliate be limited to 10 percent of capital and surplus. Covered
  transactions are defined to include, among other things, loans and other
  extensions of credit to such an affiliate and guarantees, acceptances and
  letters of credit issued on behalf of such an affiliate. Such loans, other
  extensions of credit, guarantees, acceptances and letters of credit must be
  secured. Other restrictions also apply to inter-affiliate transactions.

     Limitations exist on the availability of BTCo's undistributed earnings for
  the payment of dividends to the Parent Company without prior approval of the
  bank regulatory authorities. In this regard, BTCo can declare dividends in
  1996 without approval of the regulatory authorities of $66 million of its
  retained earnings at December 31, 1995, plus an additional amount equal to net
  profits, as defined, for 1996 up to the date of any such dividend declaration.
  The Federal Reserve Board may prohibit the payment of dividends if it
  determines that circumstances relating to the financial condition of a bank
  are such that the payment of dividends would be an unsafe and unsound
  practice.



                          BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 77
<PAGE>   47
     Certain other subsidiaries are subject to various regulatory and other
  restrictions which may limit cash dividends and advances to the Parent
  Company.

NOTE 15 -- INTEREST REVENUE AND INTEREST EXPENSE

  The following are the components of interest revenue and interest expense:

<TABLE>
<CAPTION>
  (in millions) Year Ended December 31,             1995        1994        1993
  ------------------------------------------------------------------------------
<S>                                               <C>         <C>         <C>   
  INTEREST REVENUE
  Trading assets                                  $2,676      $2,930      $2,413
  Loans                                              941         876         884
  Interest-bearing deposits with banks               207         124         214
  Federal funds sold                                 104          31          22
  Securities purchased under resale
   agreements                                      1,057         468         381
  Securities borrowed                                509         211         127
  Securities available for sale
    Taxable                                          344         312          --
    Exempt from federal income taxes                  48          78          --
  Investment securities
    Taxable                                           --          --         329
    Exempt from federal income taxes                  --          --          66
  ------------------------------------------------------------------------------
  Total interest revenue                           5,886       5,030       4,436
  ------------------------------------------------------------------------------
  INTEREST EXPENSE
  Deposits
    In domestic offices                              376         268         218
    In foreign offices                               984         696         795
  Trading liabilities                              1,053         807         424
  Securities sold under repurchase
    agreements                                     1,173         917         865
  Other short-term borrowings                      1,033         894         606
  Long-term debt                                     450         276         214
  ------------------------------------------------------------------------------
  Total interest expense                           5,069       3,858       3,122
  ------------------------------------------------------------------------------
  Net interest revenue                            $  817      $1,172      $1,314
  ==============================================================================
</TABLE>

NOTE 16 -- TRADING REVENUE; FEES AND COMMISSIONS; OTHER NONINTEREST REVENUE

     The following are the components of trading revenue, fees and commissions
  and other noninterest revenue:

<TABLE>
<CAPTION>
  (in millions) Year Ended December 31,              1995       1994        1993
  ------------------------------------------------------------------------------
<S>                                                <C>        <C>         <C>   
  TRADING REVENUE
  Interest rate risk                               $   87     $  278      $1,066
  Foreign exchange risk                                36        (54)        191
  Equity and commodity risk                           218        241         374
  ------------------------------------------------------------------------------
  Total trading revenue                            $  341     $  465      $1,631
  ==============================================================================
  FEES AND COMMISSIONS
  Corporate finance fees                           $  398     $  431      $  407
  Service charges on deposit accounts                  70         84          90
  Acceptances and letters of credit
   commissions                                         42         44          50
  Other                                               202        197         163
  ------------------------------------------------------------------------------
  Total fees and commissions                       $  712     $  756      $  710
  ==============================================================================
  OTHER NONINTEREST REVENUE
  Insurance premiums                               $  234     $  183      $  124
  Net revenue from equity investment
   transactions, including write-offs                 146        109         126
  Other                                               113        148          57
  ------------------------------------------------------------------------------
  Total other noninterest revenue                  $  493     $  440      $  307
  ==============================================================================
</TABLE>

NOTE 17 -- OTHER NONINTEREST EXPENSES

  The following are the components of other noninterest expenses:

<TABLE>
<CAPTION>
  (in millions) Year Ended December 31,                 1995      1994      1993
  ------------------------------------------------------------------------------
<S>                                                     <C>       <C>       <C> 
  Provision for policyholder benefits                   $271      $205      $140
  Fees for professional services                         205       151       149
  Telecommunications                                     114       114        91
  Agency personnel fees                                  112       117        88
  Service bureaus                                         86        76        40
  Travel and entertainment                                79        99        85
  Other                                                  223       182       284
  ------------------------------------------------------------------------------
  Total other noninterest expenses                    $1,090      $944      $877
  ==============================================================================
</TABLE>

NOTE 18 -- PENSION AND OTHER EMPLOYEE BENEFIT PLANS

Pension Plans

  The Corporation has a trusteed, noncontributory, defined benefit pension plan
  covering substantially all domestic employees. The pension plan benefit
  formula is based upon years of service and average compensation over the final
  years of service. For this principal domestic pension plan, the Corporation's
  policy is to fund amounts which are actuarially determined in accordance with
  the applicable provisions of the Employee Retirement Income Security Act of
  1974 ("ERISA"). Pension plan assets for this plan primarily consist of equity
  and debt securities managed by BTCo.

     The Corporation also has a domestic, unfunded defined contribution plan, as
  well as both defined benefit and defined contribution retirement and similar
  plans covering the majority of its foreign employees. Contributions to defined
  contribution plans are based upon a percentage of salary.



78 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   48
     Effective June 30, 1994, a foreign defined benefit plan was changed to a
  defined contribution plan. As a result of this change, the Corporation
  recognized a $7 million curtailment/settlement gain in other noninterest
  revenue.

     Pension expense for 1995, 1994 and 1993 included the following components:

<TABLE>
<CAPTION>
  (in millions)                                      1995       1994       1993
  -----------------------------------------------------------------------------
<S>                                                  <C>        <C>        <C> 
  Principal defined benefit plans
   (domestic and foreign)
      Service cost -- benefits earned                $ 17       $ 23       $ 20
      Interest cost on projected benefit
        obligations                                    38         37         33
      Actual return on plan assets                   (151)         6        (89)
      Net amortization and deferral                    83        (73)        23
  -----------------------------------------------------------------------------
  Total                                               (13)        (7)       (13)
  Defined contribution plans                           20         10         12
  Other plans                                           5          2          4
  -----------------------------------------------------------------------------
  Pension expense                                    $ 12       $  5       $  3
  =============================================================================
</TABLE>

     The actuarial assumptions used for the principal domestic defined benefit
  plan were as follows:

<TABLE>
<CAPTION>
                                                     1995       1994       1993
  -----------------------------------------------------------------------------
<S>                                                  <C>        <C>        <C>  
  Discount rate in determining expense               8.75%      7.25%      8.00%
  Discount rate in determining benefit
    obligations at year end                          7.00%      8.75%      7.25%
  Rate of increase in future compensation
    levels for determining expense                   5.00%      5.00%      5.00%
  Rate of increase in future compensation
    levels for determining benefit
    obligations at year end                          5.00%      5.00%      5.00%
  Expected long-term rate of return
    on assets                                        9.00%      9.00%      9.00%
</TABLE>

     At year end 1995, the effect of changing the discount rate from 8.75% to
  7.00% was to increase the projected benefit obligation, accumulated benefit
  obligation and vested benefit obligation by $96 million, $73 million and $70
  million, respectively.

     At year end 1994, the effect of changing the discount rate from 7.25% to
  8.75% was to decrease the projected benefit obligation, accumulated benefit
  obligation and vested benefit obligation by $85 million, $64 million and $62
  million, respectively.

     Effective January 1, 1994, several plan changes were implemented,
  principally a change in early retirement benefits for certain vested
  employees. The effect of the plan changes was to increase the projected
  benefit obligation, accumulated benefit obligation and vested benefit
  obligation by $13 million, $9 million and $8 million, respectively.

     The assumptions used for the other domestic and the principal foreign
  defined benefit plans were substantially similar to those used for the
  principal domestic plan, given local economic conditions in the cases of the
  principal foreign plans.

     The following table sets forth the funded status and amounts recognized in
  the Corporation's balance sheet for its principal domestic and foreign defined
  benefit pension plans:

<TABLE>
<CAPTION>
                                                          December 31, 1995               December 31, 1994
                                                    -----------------------------   -----------------------------
                                                    Assets Exceed     Accumulated   Assets Exceed     Accumulated
                                                      Accumulated        Benefits     Accumulated        Benefits
  (in millions)                                          Benefits   Exceed Assets        Benefits   Exceed Assets
  ---------------------------------------------------------------------------------------------------------------
<S>                                                 <C>             <C>             <C>              <C>  
  Actuarial present value of benefit obligations:
     Vested benefit obligations                             $(445)          $(22)           $(339)           $(19)
  ---------------------------------------------------------------------------------------------------------------
     Accumulated benefit   
      obligations                                           $(460)          $(22)           $(351)           $(20)
  ---------------------------------------------------------------------------------------------------------------
  Projected benefit obligations                             $(544)          $(23)           $(418)           $(21)
  Plan assets at fair value                                   795              1              674               1
  ---------------------------------------------------------------------------------------------------------------
  Funded status                                               251            (22)             256             (20)
  Unrecognized net (assets)
    obligations                                               (28)             1              (35)              2
  Unrecognized prior service cost                              17             --               20              --
  Unrecognized net (gain) loss                                (92)             4             (106)              3
  Additional minimum liability                                 --             (5)              --              (4)
  ---------------------------------------------------------------------------------------------------------------
  Prepaid (accrued) pension cost                            $ 148           $(22)           $ 135            $(19)
  ---------------------------------------------------------------------------------------------------------------
</TABLE>

Postretirement Benefits

  The Corporation provides health care benefits to employees (retirees) who met
  specific age and/or service requirements on January 1, 1990 provided that they
  retire (retired) under the principal domestic pension plan with at least ten
  years of service. This plan is contributory for participating retirees and
  also requires them to absorb deductibles and coinsurance. The Corporation
  funds the cost of postretirement health care as benefits are paid. The
  Corporation also provides noncontributory life insurance benefits for
  substantially all domestic retirees with at least ten years of service. The
  Corporation's policy with respect to this plan is to make contributions up to
  the limits specified by Section 419 of the U.S. Internal Revenue Code.

     On January 1, 1993, the Corporation adopted SFAS 106, "Employers'
  Accounting for Postretirement Benefits Other Than Pensions" and immediately
  recognized its entire net transition obligation, by recording a charge of $100
  million ($70 million on an after-tax basis) as the cumulative effect of this
  change in accounting principle. SFAS 106 requires the use of actuarial-basis
  accrual accounting for all employer-provided postretirement benefits other
  than pensions.

     The Corporation's postretirement benefits expense for the year ended
  December 31, 1995 was $9 million. This consisted of $8 million of interest
  cost on accumulated postretirement benefit obligations and $1 million of
  service cost attributable to service during the year. For the year ended
  December 31, 1994 postretirement benefits expense was $10 million. This
  consisted of $9 million of interest cost on accumulated postretirement benefit
  obligations and $1 million of service cost attributable to service during the
  year. For the year ended December 31, 1993, postretirement benefits expense
  was $11 million. This consisted of $9 million of interest cost on accumulated
  postretirement benefit 



                          BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 79
<PAGE>   49
  obligations and $2 million of service cost attributable to service during the
  year.

     The actuarial assumptions used for the Corporation's postretirement benefit
  plans were as follows:

<TABLE>
<CAPTION>
                                       December 31, 1995      December 31, 1994
  ------------------------------------------------------------------------------
                                      Retiree     Retiree    Retiree     Retiree
                                       Health        Life     Health        Life
  ($ in millions)                        Care   Insurance       Care   Insurance
  ------------------------------------------------------------------------------
<S>                                   <C>       <C>          <C>       <C>
  Health care cost trend rate:
    First year                          11.00%        N/A      12.00%        N/A
  ------------------------------------------------------------------------------
    Ultimate rate after 6 years
      (1995) and 7 years (1994)
      (based on roughly
      equal annual decreases)            5.50%        N/A       5.50%        N/A
  Discount rate in determining
    expense                              8.75%       8.75%      7.25%       7.25%
  ------------------------------------------------------------------------------
  Discount rate in determining
    benefit obligations at year-end      7.00%       7.00%      8.75%       8.75%
  ------------------------------------------------------------------------------
  Rate of increase in future
    compensation levels for
    determining benefit
    obligation at both beginning
    and end of the year                   N/A        5.00%       N/A        5.00%
  ------------------------------------------------------------------------------
  Expected long-term rate of
    return on plan assets                 N/A        9.00%       N/A        9.00%
  Effect of a one-percentage-point
    increase in the health care
    cost trend rates on the
    accumulated postretirement
    benefit obligation                     $6         N/A         $6         N/A
  The effect of a one-percentage-
    point increase in the assumed 
    health care cost trend rates on 
    the aggregate of the service 
    and interest cost components 
    of net periodic postretirement
    expense for the year ended             $1         N/A         $1         N/A
  ------------------------------------------------------------------------------
</TABLE>

  N/A Not applicable.

     At year end 1995, the effect of changing the discount rate from 8.75% to
  7.00% was to increase the accumulated postretirement benefit obligation for
  the retiree health care plan and the retiree life insurance plan by $2 million
  and $1 million, respectively.

     At year end 1994, the effect of changing the discount rate from 7.25% to
  8.75% was to decrease the accumulated postretirement benefit obligation for
  the retiree health care plan and the retiree life insurance plan by $16
  million and $3 million, respectively. Effective January 1, 1994 the plan was
  amended regarding retiree deductibles. The effect of the plan amendment was to
  increase the accumulated postretirement benefit obligation by $9 million.

     The following table sets forth the funded status and amounts recognized in
  the Corporation's balance sheet:

<TABLE>
<CAPTION>
                                         December 31, 1995    December 31, 1994
  ------------------------------------------------------------------------------
                                        Retiree     Retiree   Retiree    Retiree
                                         Health        Life    Health       Life
  ($ in millions)                          Care   Insurance      Care  Insurance
  ------------------------------------------------------------------------------
<S>                                     <C>       <C>         <C>      <C> 
  Accumulated postretirement
    benefit obligation:
      Retirees                            $ (62)       $ (5)    $ (63)       $(4)
      Fully eligible plan participants      (16)         --       (15)        --
      Other active plan participants        (18)         (5)      (16)        (4)
  ------------------------------------------------------------------------------
                                            (96)        (10)      (94)        (8)
  Plan assets at fair value                  --           5        --          4
  ------------------------------------------------------------------------------
  Funded status                             (96)         (5)      (94)        (4)
  Unrecognized prior service cost             8          --         9         --
  Unrecognized net (gain) loss              (23)          1       (26)        --
  ------------------------------------------------------------------------------
  Accrued postretirement
    benefit cost                          $(111)       $ (4)    $(111)       $(4)
  ==============================================================================
</TABLE>

Profit Sharing Plans

  The Corporation maintains a noncontributory profit sharing plan, called
  PartnerShare, covering substantially all domestic employees. The Corporation's
  contribution consists of a fixed contribution equal to six percent of eligible
  domestic employees' annual salary (the "Fixed Contribution") as well as an
  additional contribution of from zero to nine percent of eligible employees'
  annual salary, which percentage is calculated using a formula based on the
  Corporation's consolidated income before income taxes (the "Profit-Driven
  Contribution"). The Profit-Driven Contribution was 1.69 percent, 4.73 percent
  and 9.00 percent for 1995, 1994 and 1993, respectively. The sum of the Fixed
  Contribution and the Profit-Driven Contribution amounted to $29 million, $41
  million and $53 million for the years 1995, 1994 and 1993, respectively.

     The Corporation also has a profit sharing plan (called the "Share and
  Discretionary Cash Scheme") covering its employees in the United Kingdom. The
  Corporation's contributions to this plan range from zero to 14 percent of
  eligible employees' annual salary, which percentage is calculated using a
  formula based on the Corporation's consolidated income before income taxes.
  The contribution for 1995, 1994 and 1993 was 3.11 percent, 8.69 percent and
  10.00 percent, respectively. The amount of expense recognized for the Share
  and Discretionary Cash Scheme was $2 million, $8 million and $5 million for
  1995, 1994 and 1993, respectively.

Postemployment Benefits

  On January 1, 1993, the Corporation adopted SFAS 112 "Employers' Accounting
  for Postemployment Benefits" by recording a charge of $7 million ($5 million
  on an after-tax basis) as the cumulative effect of this change in accounting
  principle. SFAS 112 establishes accounting standards for employer-provided
  benefits which cover former or inactive employees after employment but before
  retirement ("postemployment benefits"). Postemployment benefits include
  severance benefits, short- and long-term disability benefits, workers'
  compensation and the continuation of health care and life insurance coverage.
  SFAS 112 requires employers to recognize the probable and reasonably estimable
  costs of postemployment benefits on an accrual basis.


 80 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   50
NOTE 19 -- INCOME TAXES

  The Corporation files consolidated income tax returns which include all
  significant domestic subsidiaries. 

     The domestic and foreign components of consolidated income before income 
  taxes and cumulative effects of accounting changes follow:

<TABLE>
<CAPTION>
  (in millions) Year Ended December 31,           1995          1994        1993
  ------------------------------------------------------------------------------
<S>                                              <C>            <C>       <C>    
  Domestic                                       $ (89)         $139      $ (101)
  Foreign                                          400           730       1,651
  ------------------------------------------------------------------------------
  Total                                           $311          $869      $1,550
  ==============================================================================
</TABLE>

     For purposes of determining the above amounts, foreign income is defined as
  income recorded by operations located outside of the U.S.

     Undistributed earnings of certain foreign subsidiaries amounted to
  approximately $1.1 billion at December 31, 1995. Federal taxes which would
  have approximated $190 million, assuming utilization of foreign tax credits,
  have not been provided on these earnings, as they are permanently reinvested
  outside the U.S.

     Deferred income taxes result from differences in the timing of revenue and
  expense recognition for income tax and financial reporting purposes.

     An analysis of consolidated income taxes, excluding the cumulative effects
  of accounting changes, follows:

<TABLE>
<CAPTION>
  (in millions) Year Ended December 31,           1995          1994        1993
  ------------------------------------------------------------------------------
<S>                                               <C>           <C>         <C> 
  Income taxes applicable to:
    Income before income taxes*                   $ 96          $254        $480
    Capital surplus                                  3            (5)        (16)
    Cumulative translation adjustments               9           (59)         (5)
    Securities valuation allowance                 (26)          (16)         56
  ------------------------------------------------------------------------------
  Total                                           $ 82          $174        $515
  ==============================================================================
</TABLE>

  * Includes income tax expense related to securities available for sale 
    transactions of $74 million and $26 million in 1995 and 1994, respectively 
    and includes income tax expense related to investment securities 
    transactions of $5 million in 1993.

     The components of consolidated income taxes, excluding the cumulative
  effects of accounting changes, follow:

<TABLE>
<CAPTION>
  (in millions) Year Ended December 31,           1995          1994        1993
  ------------------------------------------------------------------------------
<S>                                              <C>           <C>         <C>  
  Current
    Federal                                      $   5         $   5       $   5
    Foreign                                        317           294         524
    State and local                                 19            16          23
  ------------------------------------------------------------------------------
  Total current                                    341           315         552
  ------------------------------------------------------------------------------
  Deferred
    Federal                                       (123)         (102)         70
    Foreign                                       (141)          (61)       (114)
    State and local                                  5            22           7
  ------------------------------------------------------------------------------
  Total deferred                                  (259)         (141)        (37)
  ------------------------------------------------------------------------------
  Total                                          $  82         $ 174       $ 515
  ==============================================================================
</TABLE>

     The following is an analysis of the difference between the U.S. federal
  statutory income tax rate and the effective tax rate on consolidated income
  before income taxes and cumulative effects of accounting changes:

<TABLE>
<CAPTION>
  Year Ended December 31,                         1995          1994        1993
  ------------------------------------------------------------------------------
<S>                                               <C>           <C>         <C>
  U.S. federal statutory income tax rate            35%           35%         35%
    State and local income taxes                     5             2           1
    Tax-exempt income                               (8)           (6)         (2)
    Foreign subsidiary earnings                      3            (1)         (1)
    Other items, net                                (4)           (1)         (2)
  ------------------------------------------------------------------------------
  Effective income tax rate                         31%           29%         31%
  ==============================================================================
</TABLE>

     The following is an analysis of the Corporation's net deferred tax
  assets:

<TABLE>
<CAPTION>
  (in millions) December 31,                                    1995        1994
  ------------------------------------------------------------------------------
<S>                                                           <C>         <C>   
  Deferred tax assets                                         $1,087      $1,053
  Valuation allowance                                            227         227
  ------------------------------------------------------------------------------
  Deferred tax assets net of valuation allowance                 860         826
  Deferred tax liabilities                                       392         617
  ------------------------------------------------------------------------------
  Net deferred tax assets                                     $  468      $  209
  ==============================================================================
</TABLE>

     At December 31, 1995, the Corporation's deferred tax assets were primarily
  related to credit losses ($533 million), foreign tax credit carryforwards
  ($140 million) that will expire in 1999 and 2000, and a net operating loss
  carryforward ($41 million) which expires in 2009. Deferred tax liabilities
  were primarily related to certain trading activities ($62 million) and lease
  financing activities ($155 million). At December 31, 1994, the Corporation's
  deferred tax assets were primarily related to credit losses ($633 million) and
  deferred tax liabilities were primarily related to certain trading activities
  ($179 million) and lease financing activities ($221 million).

NOTE 20 -- EARNINGS PER COMMON SHARE

  Primary and fully diluted earnings per common share amounts were computed by
  subtracting from the applicable earnings the dividend requirements on
  preferred stock to arrive at earnings applicable to common stock and dividing
  this amount by the average number of common and common equivalent shares
  outstanding during the year.

     For both primary and fully diluted earnings per share, the average number
  of common and common equivalent shares outstanding was the sum of the average
  number of shares of common stock outstanding and the incremental number of
  shares issuable under outstanding stock options and deferred stock awards that
  had a dilutive effect as computed under the treasury stock method. Under this
  method, the number of incremental shares is determined by assuming the
  issuance of the outstanding stock options and deferred stock awards reduced by
  the number of shares assumed to be repurchased from the issuance proceeds,
  using the market price of the Parent Company's common stock. For primary
  earnings per share, this market price is the average market price for the
  period, while for fully diluted earnings per share, it is the 



                          BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 81
<PAGE>   51
  period-end market price, if it is higher than the average price. At no time
  during the three-year period ended December 31, 1995 did the Corporation have
  outstanding any securities which were convertible to the Parent Company's
  common stock.

     The earnings applicable to common stock and number of shares used for
  primary and fully diluted earnings per share were as follows:

<TABLE>
<CAPTION>
  (in millions) Year Ended December 31,           1995          1994        1993
  ------------------------------------------------------------------------------
<S>                                             <C>           <C>         <C>   
  Earnings applicable to common stock:
    Income before cumulative effects
      of accounting changes                       $164          $587      $1,047
    Cumulative effects of accounting
    changes                                         --            --         (75)
  ------------------------------------------------------------------------------
    Net income                                    $164          $587      $  972
  ------------------------------------------------------------------------------
  Average number of common shares
    outstanding                                 78.458        79.012      82.249
  Primary earnings per share
    Average number of common and
      common equivalent shares
      outstanding                               80.923        81.825      84.456
  Fully diluted earnings per share
    Average number of common and
      common equivalent shares
      outstanding -- assuming
      full dilution                             81.095        81.865      85.183
  ==============================================================================
</TABLE>

NOTE 21 -- INTERNATIONAL OPERATIONS

  In order to comply with the financial reporting regulations of the Securities
  and Exchange Commission, the Corporation is required to report international
  operations on the basis of the domicile of the customer. Pursuant to these
  regulations, any business transacted with a customer who is domiciled outside
  the U.S. is reported as international operations. Due to the complex nature of
  the Corporation's businesses and because its revenue from customers domiciled
  outside the U.S. is recorded in both domestic and foreign offices, it is
  impossible to segregate with precision the respective contributions to income
  from the domestic and international operations. As these operations are highly
  integrated, estimates and subjective assumptions have been made to apportion
  revenue and expenses between domestic and international operations. These
  estimates and assumptions include: interest revenue and interest expense are
  apportioned to geographic areas based upon the geographic distribution of
  average assets, which reflects the domicile of the customer; charges for funds
  transferred from domestic to international locations are based upon the cost
  of short-term funds; allocation of the provision for credit losses is based
  upon total net charges to the allowance for credit losses and adjusted to
  reflect management's assessment of the risks associated with the domestic and
  international portfolios; noninterest revenue is generally distributed based
  on the location of the office recording the revenue; noninterest expenses are
  generally apportioned to the geographic area based on the geographical
  distribution of operating income (net interest revenue plus noninterest
  revenue); and adjustments are made for the difference between foreign and U.S.
  tax rates.

     Subject to the above limitations, estimates and assumptions, the following
  tables present information attributable to international operations:

<TABLE>
<CAPTION>
                                                                 Income
                                   Total     Total       Total   before      Net
  ($ in millions)                 assets   revenue*   expenses*   taxes   income
  ------------------------------------------------------------------------------
<S>                             <C>        <C>        <C>        <C>      <C> 
  1995
  ------------------------------------------------------------------------------
  International operations
    Asia                        $  7,565    $  710      $  616     $ 94     $ 71
    Australia/New Zealand          7,658       803         741       62       47
    Western Hemisphere            10,245     1,201       1,151       50       38
    Europe                         8,001       818         758       60       46
    United Kingdom                28,850       599         777     (178)    (134)
    Middle East/Africa               302        15          16       (1)      (1)
  Intersegment eliminations      (11,119)     (751)       (751)      --       --
  ------------------------------------------------------------------------------
      Total international         51,502     3,395       3,308       87       67
  Domestic operations             52,500     4,914       4,690      224      148
  ------------------------------------------------------------------------------
  Total                         $104,002    $8,309      $7,998     $311     $215
  ------------------------------------------------------------------------------
  International percentage
    of total                          50%       41%         41%      28%      31%
  ==============================================================================
</TABLE>

<TABLE>
<CAPTION>
                                                                  Income
                                   Total     Total       Total    before      Net
  ($ in millions)                 assets   revenue*   expenses*    taxes   income
  -------------------------------------------------------------------------------
  1994
  -------------------------------------------------------------------------------
<S>                             <C>        <C>        <C>         <C>      <C>
  International operations
    Asia                        $  7,867    $  434      $  423      $ 11     $  8
    Australia/New Zealand          8,086       733         526       207      151
    Western Hemisphere             8,775       896         793       103       75
    Europe                         6,746       581         544        37       27
    United Kingdom                25,645     1,546       1,402       144      105
    Middle East/Africa               123        16          13         3        2
  Intersegment eliminations      (21,109)     (913)       (913)       --       --
  -------------------------------------------------------------------------------
      Total international         36,133     3,293       2,788       505      368
  Domestic operations             60,883     4,210       3,846       364      247
  -------------------------------------------------------------------------------
  Total                         $ 97,016    $7,503      $6,634      $869     $615
  -------------------------------------------------------------------------------
  International percentage
    of total                          37%       44%         42%       58%      60%
  ===============================================================================
</TABLE>

  * Total revenue includes interest revenue and noninterest revenue. Total
    expenses includes interest expense and noninterest expenses.



82 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   52
<TABLE>
<CAPTION>
                                                                Income
                                  Total     Total       Total   before         Net
  ($ in millions)                assets   revenue*   expenses*   taxes(1)   income
  --------------------------------------------------------------------------------
  1993
  --------------------------------------------------------------------------------
<S>                            <C>        <C>       <C>         <C>         <C>
  International operations
    Asia                       $  6,942    $  678      $  454   $  224        $151
    Australia/New Zealand         5,730       637         428      209         141
    Western Hemisphere            7,683       562         462      100          68
    Europe                       12,351       686         639       47          32
    United Kingdom               14,791     2,266       1,570      696         471
    Middle East/Africa              307        29          26        3           2
  Intersegment eliminations     (12,356)     (773)       (773)      --          --
  --------------------------------------------------------------------------------
      Total international        35,448     4,085       2,806    1,279         865
  Domestic operations            56,634     3,715       3,444      271         130
  --------------------------------------------------------------------------------
  Total                        $ 92,082    $7,800      $6,250   $1,550        $995
  --------------------------------------------------------------------------------
  International percentage
    of total                         38%       52%         45%      83%         87%
  ================================================================================
</TABLE>

  (1) Excludes cumulative effect of accounting changes.

  * Total revenue includes interest revenue and noninterest revenue. Total
    expenses includes interest expense and noninterest expenses.

NOTE 22 -- DERIVATIVE FINANCIAL INSTRUMENTS AND FINANCIAL INSTRUMENTS WITH
           OFF-BALANCE SHEET RISK 

  In the normal course of business, the Corporation is a party to a variety of
  derivative and off-balance sheet financial instruments to meet the needs of
  its customers, to manage its exposure to interest rate and other risks, and to
  take trading positions. These financial instruments consist of derivatives
  (such as swaps and options), when-issued securities, securities lending
  indemnifications, and credit-related arrangements and involve varying degrees
  of credit risk and market risk.

     Credit risk, as defined by SFAS 105, represents the maximum potential
  accounting loss due to possible non-performance by obligors and counterparties
  under the terms of their contracts. Market risk represents the potential loss
  due to the decrease in the value of a financial instrument caused primarily by
  changes in interest rates or foreign exchange rates, or the prices of equities
  or commodities (or related indices).

     The Corporation manages the credit risk of its derivative and off-balance
  sheet portfolios by limiting the total amount of arrangements outstanding with
  individual customers; by monitoring the size and maturity structure of the
  portfolios; by obtaining collateral based on management's credit assessment of
  the customer; and by applying a uniform credit process for all credit
  exposures. Collateral held generally includes cash and U.S. government and
  federal agency securities. In order to reduce derivatives-related credit risk,
  the Corporation enters into master netting agreements which incorporate the
  right of setoff to provide for the net settlement of covered contracts with
  the same customer in the event of default or other cancellation of the
  agreement. In addition, management evaluates these portfolios periodically to
  determine whether the allowance for credit losses is adequate to absorb
  potential losses in such portfolios.

     For a further discussion of derivative financial instruments (including
  leveraged derivative transactions) the related market and credit risks, and
  controls used to monitor such risks, which is not included as part of these
  audited financial statements, see "Risk Management" on page 44, "Derivatives"
  on page 47, "Summary of Credit Loss Experience" on page 51 and "Nonperforming
  Assets" on page 54. For the risk-based capital equivalent amounts of the
  Corporation's derivative and off-balance sheet exposures, which also are not
  included as part of these audited financial statements, see "Capital
  Resources" on page 42.

Trading Derivative Financial Instruments

  The Corporation actively manages trading positions in a variety of derivative
  contracts. Many of the Corporation's trading positions are established as a
  result of providing derivative products to meet customers' demands. To
  anticipate customer demand for such transactions, the Corporation also carries
  an inventory of capital markets instruments and maintains its access to market
  liquidity by quoting bid and offer prices to, and trading with, other market
  makers. These two activities are essential to provide customers with capital
  market products at competitive prices. All positions are reported at fair
  value and changes in fair values are reflected in trading revenue as they
  occur.

     As required by SFAS 119, "Disclosure about Derivative Financial Instruments
  and Fair Value of Financial Instruments," the amounts disclosed below
  represent the end-of-period fair values of trading derivatives and their
  average aggregate fair values during the year. These amounts are presented
  gross before the impact of master netting agreements and collateral. The gross
  fair values of trading derivatives do not represent the amount of market or
  credit risk of derivatives in the trading portfolio. Rather, they indicate the
  extent of involvement in the over-the-counter (OTC) markets for interest rate,
  foreign exchange rate, equity and commodity price derivatives, and exchange
  traded options during the year. Any measurement of risk is meaningful only
  when all related factors are identified, such as risk-offsetting transactions,
  master netting agreements, and the value of any related collateral. The
  Corporation considers such factors in its RAROC(TM) system and in other
  internal risk analyses. The accounting impact of netting agreements, which is
  applied on a cross-product basis in accordance with the terms of each master
  agreement and which is calculated based on the criteria prescribed by FIN 39,
  is provided below in order to display how these amounts are reflected in
  trading assets and trading liabilities in the consolidated balance sheet.

     Contracts with positive fair values are recorded as assets and contracts
  with negative fair values are recorded as liabilities after application of
  master netting agreements. The following table reflects the gross fair values
  and balance sheet amounts of trading derivative financial instruments:



                          BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 83
<PAGE>   53

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                        At December 31, 1995         Average during 1995
                                 ---------------------------     -----------------------
(in millions)                      Assets      (Liabilities)       Assets   (Liabilities)
----------------------------------------------------------------------------------------
<S>                              <C>           <C>               <C>        <C>
OTC Financial Instruments
Interest Rate and Currency
   Swap Contracts                $ 15,858          $(15,471)     $ 15,901       $(15,288)
Interest Rate Contracts
  Forwards                             83               (81)          114           (116)
  Options purchased                 1,426                           1,139
  Options written                                    (1,312)                      (1,727)
Foreign Exchange Rate Contracts
  Spot and Forwards                 7,931            (8,937)       12,041        (11,795)
  Options purchased                   999                           1,462
  Options written                                      (941)                      (1,269)
Equity-related contracts            2,011            (2,359)        1,549         (1,756)
Commodity-related and other
  contracts                           541              (531)          607           (472)

Exchange-Traded Options
Interest Rate                          33               (16)          106            (62)
Foreign Exchange                       --                --             1            (11)
Equity                                137               (80)          131            (69)
Commodity                              --                --             7             (5)
----------------------------------------------------------------------------------------
Total Gross Fair Values            29,019           (29,728)       33,058        (32,570)
----------------------------------------------------------------------------------------
Impact of Netting Agreements      (18,464)           18,464       (19,389)        19,389
----------------------------------------------------------------------------------------
                                 $ 10,555(1)                     $ 13,669
                                 --------          $(11,264)(1)  --------       $(13,181)
                                                   --------                     --------
<FN>
(1) As reflected on the balance sheet in "Trading Assets" and "Trading Liabilities."
</FN>
</TABLE>

<TABLE>
<CAPTION>
                                       At December 31, 1994         Average during 1994
                                 --------------------------     -----------------------
(in millions)                      Assets     (Liabilities)       Assets   (Liabilities)
---------------------------------------------------------------------------------------
<S>                              <C>          <C>               <C>        <C>
OTC Financial Instruments
Interest Rate and Currency
   Swap Contracts                $ 15,055         $(11,388)     $ 15,646       $(12,589)
Interest Rate Contracts
  Forwards                             91             (127)           66            (74)
  Options purchased                 1,211                          1,131
  Options written                                   (2,330)                      (1,707)
Foreign Exchange Rate Contracts
  Spot and Forwards                 8,127           (7,988)        9,544         (9,715)
  Options purchased                 1,504                          1,420
  Options written                                   (1,522)                      (1,276)
Equity-related contracts            1,005           (1,316)        1,499         (1,788)
Commodity-related and other
  contracts                           578             (451)          464           (398)

Exchange-Traded Options
Interest Rate                         191             (113)           77            (50)
Foreign Exchange                       --              (62)           21            (32)
Equity                                 82              (43)           86            (69)
Commodity                              --               --            --             --
---------------------------------------------------------------------------------------
Total Gross Fair Values            27,844          (25,340)       29,954        (27,698)
---------------------------------------------------------------------------------------
Impact of Netting Agreements      (13,773)          13,773       (14,511)        14,511
---------------------------------------------------------------------------------------
                                 $ 14,071(1)                    $ 15,443
                                 --------         $(11,567)(1)  --------       $(13,187)
                                                  --------                     --------
<FN>
(1) As reflected on the balance sheet in "Trading Assets" and "Trading Liabilities."
</FN>
</TABLE>

    Derivative contracts are generally either privately-negotiated OTC contracts
or standard contracts transacted through regulated exchanges. For information as
to the credit risk of OTC trading derivatives, which is not included as part of
these audited financial statements, see "Derivatives" on page 47. Fair values of
futures contracts are not included above due to cash margining requirements of
regulated exchanges. Monthly averages are used in the table above.

End-User Derivative Financial Instruments

The Corporation, as an end user, utilizes various types of derivative products
(principally interest rate swaps) to manage the interest rate, currency and
other market risks associated with certain liabilities and assets such as
interest-bearing deposits, short-term borrowings and long-term debt as well as
investments in non-marketable equity instruments and net investments in foreign
entities. Revenue or expense pertaining to management of interest rate exposure
is predominantly recognized over the life of the contract as an adjustment to
interest revenue or expense.

    When the Corporation purchases assets and issues liabilities at fixed
interest rates it subjects itself to fair value fluctuations as market interest
rates change. These fluctuations in fair value are managed by entering into
interest rate contracts which change the fixed rate instrument into a variable
rate instrument.

    When the Corporation purchases foreign currency denominated assets, issues
foreign currency denominated debt or has foreign net investments, it subjects
itself to changes in value as exchange rates move. These fluctuations are
managed by entering into currency swaps and forwards.

    The Corporation's investments in nonmarketable and restricted equity
instruments classified in other assets are subject to changes in market values.
These changes are managed by entering into equity swaps and options.

    The fair values and other information related to end-user derivatives are
disclosed in Note 24.

Notional Amounts of Trading and End-User Derivative Financial Instruments

Notional amounts indicate the extent of the Corporation's involvement in the
various types and uses of derivative financial instruments and do not measure
the Corporation's exposure to credit or market risks and do not necessarily
represent the amounts exchanged by the parties to the instruments. The amounts
exchanged are based on the contractual notional amounts and the other terms of
the instruments. Notional amounts are not included in the consolidated balance
sheet and generally exceed the future cash requirements relating to the
instruments. The leveraging effects of leveraged derivative transactions are
reflected in the table below.


84 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   54

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Notional Amounts
(in millions)                          December 31, 1995       December 31, 1994
--------------------------------------------------------------------------------
                                                  End                     End
                                        Trading  User(1)     Trading(2)  User(1)
--------------------------------------------------------------------------------
<S>                                  <C>         <C>         <C>         <C>
Interest rate contracts
Swaps                                $  540,124  $59,104     $  464,702  $34,448
Futures                                 118,822       --        231,319       --
Forwards                                 74,247    2,213         85,810    5,725
Options purchased
  Exchange traded                        52,020       --        138,370       --
  OTC                                    97,461      104         65,807      194
Options written
  Exchange traded                        41,833       --        121,362       --
  OTC                                   111,706       --        115,973       --
--------------------------------------------------------------------------------
  Total                              $1,036,213  $61,421     $1,223,343  $40,367
--------------------------------------------------------------------------------
Foreign exchange rate contracts
Spot, forwards, futures              $  475,435  $ 1,990     $  553,763  $ 1,919
Swaps                                    59,360    1,557         57,355    1,575
OTC options purchased                    22,345       --         27,851       --
OTC options written                      23,791       --         31,332       --
--------------------------------------------------------------------------------
  Total                              $  580,931  $ 3,547     $  670,301  $ 3,494
--------------------------------------------------------------------------------
Equity derivative contracts
Swaps                                $    5,681  $    22     $    2,148  $   150
Futures and forwards                     23,253       --          6,814       --
Options purchased
  Exchange traded                         2,726       --          3,333       --
  OTC                                    12,801       69         11,402       69
Options written
  Exchange traded                         6,808       --         12,809       --
  OTC                                    11,334       --          4,720       --
--------------------------------------------------------------------------------
  Total                              $   62,603  $    91     $   41,226  $   219
--------------------------------------------------------------------------------
Commodity and other contracts(3)
Swaps                                $    4,003  $    --     $    6,371$      --
Futures                                   1,622       --          2,777       --
Forwards                                  2,098       --          1,720       --
Options purchased
  Exchange traded                         1,755       --          3,107       --
  OTC                                     5,040       --          3,993       --
Options written
  Exchange traded                         2,207       --          2,389       --
  OTC                                     5,213       --          1,915       --
--------------------------------------------------------------------------------
  Total                              $   21,938  $    --     $   22,272$      --
--------------------------------------------------------------------------------
</TABLE>

(1) These are hedges of securities available for sale, other assets,
    interest-bearing deposits, other short-term borrowings, long-term debt and
    net investments in foreign subsidiaries. These are transacted with
    derivatives traders within the Corporation who are intermediaries to
    external markets.
(2) Amounts at December 31, 1994 have been restated in accordance with
    regulatory reporting standards adopted March 1995. Certain items represent
    allocations of previously reported amounts.
(3) Excluded from the notional amounts above were benefit-responsive contracts
    reflecting actuarial-related risk, minimal market risk and no credit risk,
    for which the notional values totaled $12.1 billion and $11.0 billion at
    December 31, 1995 and 1994, respectively.

SWAPS

Interest rate swap contracts generally represent the contractual exchange of
fixed and floating rate payments of a single currency, based on a notional
amount and an interest reference rate. Cross-currency interest rate swap
contracts generally involve the exchange of payments which are based on the
interest reference rates available at the inception of the contract on two
different currency principal balances that are exchanged. The principal balances
are re-exchanged at an agreed upon rate at a specified future date. Equity swap
contracts typically involve the payment of an amount equal to the total return
of a U.S. or international equity index, basket of equities, or an individual
equity over a fixed time period in exchange for receiving a floating interest
rate, both based upon the same notional amount.

FUTURES AND FORWARDS

Futures and forward contracts represent commitments to purchase or sell
securities, money market instruments, foreign currencies or commodities at a
future date and at a specified price. Futures contracts are traded on regulated
U.S. and international exchanges. The Corporation intends to close out most open
positions in futures contracts prior to maturity, therefore future cash receipts
or payments are generally limited to the change in fair value of the underlying
instruments. Since futures contracts generally entail daily net cash margining
with regulated exchanges, the credit risk is generally minimized to a one-day
receivable. Included in this category of contracts are spot foreign currency
contracts, cash-settled index contracts, and forward rate agreements (agreements
to exchange amounts at a specified future date for interest rate differentials
between an agreed interest rate and a reference rate, computed on a notional
amount).

OPTIONS

Option contracts are either deliverable or cash-settled. Deliverable contracts
convey to the purchaser (holder) the right to buy (call) or sell (put)
securities, money market instruments, foreign currencies or commodities at or
before a specified date for a contracted price from the seller (writer) of the
contract. Cash-settled contracts convey to the purchaser the right to the
monetary equivalent of the increase (call) or decrease (put), or a percentage
thereof, in a specified reference rate or index, computed on a notional amount,
from the writer. The initial price of an option contract is equal to the premium
paid by the purchaser and is significantly less than the contract or notional
amount. Included in these contracts are: (i) interest rate caps, floors and
collars, which are agreements to make periodic payments for interest rate
differentials between an agreed upon interest rate and a reference rate and (ii)
purchased options to enter into future (or cancel existing) interest rate swap
contracts ("swap options").

    The Corporation is subject to credit risk as a purchaser of an option
contract, and is subject to market risk to the extent of the purchase price of
the option. The Corporation is subject to market risk on its written option
contracts, but not to credit risk, except as noted below, since the customer has
already performed according to the terms of the contract by paying a cash
premium


                          BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 85
<PAGE>   55

--------------------------------------------------------------------------------

up front. However, for SFAS 105 purposes, credit risk arises to the extent that
the option contract requires or permits settlement in the underlying instrument,
and that instrument is subject to credit risk. Such amounts related to certain
written put option contracts on debt securities and certain forward contracts to
purchase debt securities were $4.469 billion and $1.917 billion at December 31,
1995 and 1994, respectively. The underlying debt securities were primarily
obligations of the U.S. and foreign central and local governments and U.S.
federal agencies.

Financial Instruments with Off-Balance Sheet Credit Risk

As required by SFAS 105, off-balance sheet credit risk amounts are determined
without consideration of the value of any related collateral and reflect the
total potential loss on commitments to purchase when-issued securities for all
obligors (including governments); securities lending indemnifications; and
undrawn commitments, standby letters of credit and similar arrangements.

SECURITIES AND MONEY MARKET ACTIVITIES

<TABLE>
<CAPTION>
(in millions)                           December 31, 1995      December 31, 1994
--------------------------------------------------------------------------------
                                    Contract  Credit Risk  Contract  Credit Risk
                                      Amount       Amount    Amount       Amount
--------------------------------------------------------------------------------
<S>                                 <C>       <C>          <C>       <C>
When-issued securities and other
  Commitments to sell                $ 6,682      $     1   $ 3,956      $    10
  Commitments to
   purchase (1)                        3,509        3,511     6,093        6,101
Securities lending
  indemnifications                    28,761       28,761    21,018       21,018
--------------------------------------------------------------------------------
</TABLE>

(1) Includes $.6 billion and $1.5 billion of forward-dated money market assets
    at December 31, 1995 and 1994, respectively.

    When-issued securities normally begin trading when the U.S. Treasury or some
other issuer of securities announces a forth-coming issue. (In some cases,
trading may begin in anticipation of such an announcement.) Such transactions
are contingent upon the actual issuance of the security. Since the exact price
and terms of the security are unknown before the issue date, trading prior to
that date is on a "yield" basis. On the issue date the exact terms and price of
the security become known and when-issued trading continues until settlement
date, when the securities are delivered and the issuer is paid. On settlement
date, the securities purchased by the Corporation are reported on the balance
sheet.

    Securities lending indemnifications represent the market value of customers'
securities lent to third parties. The Corporation indemnifies customers to the
extent of the replacement cost and/or the market value of the securities in the
event of a failure by a third party to return the securities lent. The market
value of collateral, primarily cash, received for customers' securities lent was
in excess of the contract amounts and was approximately $30 billion at December
31, 1995 and $23 billion at December 31, 1994.

CREDIT-RELATED ARRANGEMENTS

<TABLE>
<CAPTION>
(in millions)                           December 31, 1995      December 31, 1994
--------------------------------------------------------------------------------
                                    Contract  Credit Risk  Contract  Credit Risk
                                      Amount       Amount    Amount       Amount
--------------------------------------------------------------------------------
<S>                                 <C>       <C>          <C>       <C>
Commitments to extend
  credit (1)                          $9,370       $9,370    $8,808       $8,808
Standby letters of credit and
  similar arrangements (2)             4,562        4,562     4,413        4,413
</TABLE>

(1) Includes participations to other entities of approximately $2 billion at
    both December 31, 1995 and 1994. Of the non-participated amount,
    approximately $3 billion expire in one year or less at both December 31,
    1995 and 1994. Both the contract amount and the credit risk amount include
    commitments to enter into securities resale agreements of $.8 billion at
    December 31, 1995.
(2) Includes participations to other entities of approximately $1 billion and $2
    billion at December 31, 1995 and 1994, respectively.

    Commitments to extend credit represent contractual commitments to make loans
and revolving credits. Commitments generally have fixed expiration dates or
other termination clauses and require the payment of a fee. Since commitments
may expire without being drawn upon, the total contract amounts do not
necessarily represent future cash requirements. Included in the amounts above
are unused commitments to extend credit that are related to loans held for
trading purposes. Information regarding the Corporation's credit risk with
respect to real estate financing activities and highly leveraged transactions,
which is not included as part of the audited financial statements, is disclosed
on pages 55 through 57.

    Standby letters of credit and similar arrangements ("standbys"), issued
primarily to support corporate obligations, commit the Corporation to make
payments on behalf of customers contingent upon the failure of the customer to
perform under the terms of the contract. Standbys outstanding related to
customer obligations, such as commercial paper, medium- and long-term notes and
debentures (including industrial revenue obligations), as well as other
financial and performance related obligations. At December 31, 1995, $3.428
billion will expire within one year, $953 million from one to four years and
$181 million after four years.

    For standbys, commitments to extend credit and securities lending
indemnifications, the credit risk amount represents the contractual amount.
Standbys and commitments to extend credit would have market risk if issued or
extended at a fixed rate of interest. However, these contracts are primarily
made at a floating rate. Fees received are generally recognized as revenue over
the life of the commitment.


86 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   56

--------------------------------------------------------------------------------

NOTE 23 -- CONCENTRATIONS OF CREDIT RISK

The Corporation, as required by SFAS 105, has identified two significant
concentrations of credit risk: OECD country banks and OECD country central
governments, their agencies and central banks. Together they represented 36
percent and 40 percent of total credit risk at December 31, 1995 and 1994,
respectively. The Organization for Economic Cooperation and Development (OECD)
is an international organization of countries which are committed to
market-oriented economic policies, including the promotion of private enterprise
and free market prices, liberal trade policies, and the absence of exchange
controls. The OECD consists of 26 industrialized nations, primarily the
countries of Western Europe, North America, Japan, Australia and New Zealand.
For risk-based capital purposes, domestic and foreign bank regulators generally
assign OECD country central governments, their agencies and their central banks
a credit risk weighting of zero percent, which means that no capital is required
to support their financial instruments. OECD country banks are assigned the next
lowest credit risk weighting (20 percent) by these regulators. The largest
counterparty concentration was the U.S. government and its related entities,
which comprised approximately 49 percent of the OECD country governments
category. Within all other counterparties, the amount collateralized by cash and
U.S. government securities represented 27 percent of total credit risk.

    The following table reflects the aggregate credit risk by groups of
counterparties, as defined by SFAS 105, relating to on- and off-balance sheet
financial instruments, including derivatives, at December 31, 1995 and 1994.

CREDIT RISK

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                            On-Balance   Off-Balance
(in millions)                                    Sheet         Sheet       Total
--------------------------------------------------------------------------------
<S>                                         <C>          <C>            <C>
1995
--------------------------------------------------------------------------------
Significant concentrations (1)
  OECD country banks (2)                       $21,553       $ 3,894    $ 25,447
  OECD country governments                      19,862         6,567      26,429
--------------------------------------------------------------------------------
    Total significant concentrations            41,415        10,461      51,876
All other (3)(4)                                52,023        40,210      92,233
--------------------------------------------------------------------------------
Total                                          $93,438       $50,671    $144,109
--------------------------------------------------------------------------------
1994
--------------------------------------------------------------------------------
Significant concentrations (1)
  OECD country banks (2)                       $21,949       $ 4,556    $ 26,505
  OECD country governments                      19,968         5,934      25,902
--------------------------------------------------------------------------------
    Total significant concentrations            41,917        10,490      52,407
All other (3)(4)                                47,253        31,674      78,927
--------------------------------------------------------------------------------
Total                                          $89,170       $42,164    $131,334
--------------------------------------------------------------------------------
</TABLE>

(1) For these purposes, the Czech Republic and Mexico have been excluded from
    the OECD categories.
(2) Included in the on-balance sheet component of this category was
    approximately $5 billion and $6 billion at December 31, 1995 and 1994,
    respectively, that was collateralized by U.S. government securities.
(3) The "all other" category of credit risk is diversified with respect to type
    of obligor and counterparty. Included in the on-balance sheet component of
    this category was approximately $10 billion and $5 billion at December 31,
    1995 and 1994, respectively, that was collateralized by cash and U.S.
    government securities. Included in the off- balance sheet component of this
    category at December 31, 1995 was approximately $28 billion that was
    collateralized by cash and U.S. government securities and approximately $6
    billion of unused commitments to extend credit, approximately $3 billion of
    which expire in one year or less. The corresponding amounts for December 31,
    1994 were $20 billion, $6 billion and $3 billion, respectively.
(4) Includes:

CREDIT RISK

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                            On-Balance   Off-Balance
(in millions)                                    Sheet         Sheet       Total
--------------------------------------------------------------------------------
<S>                                         <C>          <C>            <C>
1995
--------------------------------------------------------------------------------
  Real estate                                   $1,802          $443      $2,245
  Highly leveraged                               1,173           802       1,975
1994
--------------------------------------------------------------------------------
  Real estate                                   $1,700          $550      $2,250
  Highly leveraged                               1,060           509       1,569
</TABLE>

    Information regarding the Corporation's credit risk with respect to real
estate financing activities and highly leveraged transactions, which is not
included as part of the audited financial statements, appears on pages 55
through 57.


                          BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 87
<PAGE>   57

--------------------------------------------------------------------------------

NOTE 24 -- FAIR VALUE OF FINANCIAL INSTRUMENTS

SFAS 107, "Disclosures about Fair Value of Financial Instruments," requires the
disclosure of fair value information about financial instruments, whether or not
recognized in the balance sheet, for which it is practicable to estimate that
value. Quoted market prices, when available, are used as the measure of fair
value. In cases where quoted market prices are not available, fair values are
based on present value estimates or other valuation techniques. These derived
fair values are significantly affected by assumptions used, principally the
timing of future cash flows and the discount rate. Because assumptions are
inherently subjective in nature, the estimated fair values cannot be
substantiated by comparison to independent market quotes and, in many cases, the
estimated fair values would not necessarily be realized in an immediate sale or
settlement of the instrument. The disclosure requirements of SFAS 107 exclude
certain financial instruments and all nonfinancial instruments (e.g., franchise
value of businesses). Accordingly, the aggregate fair value amounts presented do
not represent management's estimation of the underlying value of the
Corporation.

    SFAS 119 amended SFAS 107 disclosure requirements as of December 31, 1994.
The amendments, among others, require that the disclosures distinguish between
financial instruments held for trading purposes, measured at fair value with
gains and losses recognized in earnings, and financial instruments held or
issued for purposes other than trading. The fair value of derivative financial
instruments must be disclosed separately from nonderivative financial
instruments. Additionally, the fair value of derivative financial instruments
may not be netted with the fair value of other derivative financial instruments,
except as allowed by FIN 39.


88 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   58
         The following are the estimated fair values of the Corporation's
financial instruments followed by a general description of the methods and
assumptions used to estimate such fair values.

FAIR VALUE OF FINANCIAL INSTRUMENTS
<TABLE>
<CAPTION>
  --------------------------------------------------------------------------------------------------------------------------------
                                                               Underlying             Effect of         Total      Fair Value Over
  (in millions) December 31, 1995                Book Value    Fair Value   End-User Derivative    Fair Value   (Under) Book Value
  --------------------------------------------------------------------------------------------------------------------------------
  <S>                                               <C>           <C>                     <C>         <C>                   <C>
  FINANCIAL ASSETS, INCLUDING HEDGES
  Cash and due from banks                           $ 2,337       $ 2,337                 $  --       $ 2,337               $   --
  Interest-bearing deposits with banks                2,023         2,027                    --         2,027                    4
  Federal funds sold                                    854           854                    --           854                   --
  Securities purchased under resale agreements       17,958        17,959                    --        17,959                    1
  Securities borrowed                                 6,199         6,199                    --         6,199                   --
  Trading assets (see Notes 3 and 22)                47,893        47,893                    --        47,893                   --
  Securities available for sale (see Note 4)          6,283         6,376                   (93)        6,283                   --
  Loans (excluding leases), commitments to
    extend credit and standby letters of credit      12,352        12,093                    --        12,093                 (259)
  Allowance for credit losses                          (992)           --                    --           --                   992
  Due from customers on acceptances                     500           500                    --           500                   --
  Accounts receivable and accrued interest            4,220         4,220                    --         4,220                   --
  Other financial assets                              1,775         1,949                   (14)        1,935                  160
  FINANCIAL LIABILITIES, INCLUDING HEDGES
  Noninterest-bearing deposits                        3,292         3,292                    --         3,292                   --
  Interest-bearing deposits                          22,416        22,440                   (54)       22,386                  (30)
  Trading liabilities (see Notes 3 and 22)           26,091        26,091                    --        26,091                   --
  Securities sold under repurchase agreements        15,247        15,253                    --        15,253                    6
  Other short-term borrowings                        15,761        15,779                    (1)       15,778                   17
  Acceptances outstanding                               500           500                    --           500                   --
  Other financial liabilities                         4,166         4,166                    --         4,166                   --
  Long-term debt                                      9,294         9,631                  (280)        9,351                   57
  Net investments in foreign subsidiaries                --            --                   (16)          (16)                 (16)

  --------------------------------------------------------------------------------------------------------------------------------
  (in millions) December 31, 1994
  --------------------------------------------------------------------------------------------------------------------------------
  FINANCIAL ASSETS, INCLUDING HEDGES
  Cash and due from banks                           $ 1,985       $ 1,985                 $  --       $ 1,985               $   --
  Interest-bearing deposits with banks                3,390         3,390                    --         3,390                   --
  Federal funds sold                                  2,544         2,544                    --         2,544                   --
  Securities purchased under resale agreements        9,943         9,943                    --         9,943                   --
  Securities borrowed                                 6,197         6,197                    --         6,197                   --
  Trading assets (see Notes 3 and 22)                47,514        47,514                    --        47,514                   --
  Securities available for sale (see Note 4)          7,475         7,442                    33         7,475                   --
  Loans (excluding leases), commitments to
    extend credit and standby letters of credit      12,181        11,807                    --        11,807                 (374)
  Allowance for credit losses                        (1,252)           --                    --           --                 1,252
  Due from customers on acceptances                     378           378                    --           378                   --
  Accounts receivable and accrued interest            2,356         2,356                    --         2,356                   --
  Other financial assets                              1,669         1,893                   (51)        1,842                  173
  FINANCIAL LIABILITIES, INCLUDING HEDGES
  Noninterest-bearing deposits                        3,826         3,826                    --         3,826                   --
  Interest-bearing deposits                          21,113        21,089                    94        21,183                   70
  Trading liabilities (see Notes 3 and 22)           20,949        20,949                    --        20,949                   --
  Securities sold under repurchase agreements        15,617        15,614                    --        15,614                   (3)
  Other short-term borrowings                        18,222        18,220                     1        18,221                   (1)
  Acceptances outstanding                               378           378                    --           378                   --
  Other financial liabilities                         3,574         3,574                    --         3,574                   --
  Long-term debt                                      6,455         6,287                   195         6,482                   27
  Net investments in foreign subsidiaries                --            --                   (22)          (22)                 (22)
  --------------------------------------------------------------------------------------------------------------------------------
</TABLE>



         A discussion of the nature, objectives and strategies for using end-
user derivatives can be found in Note 22.

         The following table provides the gross unrealized gains and losses for
end-user derivatives. Gross unrealized gains and losses for hedges of securities
available for sale are recognized in the financial statements with the offset as
an adjustment to securities valuation allowance in stockholders' equity. Gross
unrealized gains and losses for hedges of other assets, interest-bearing
deposits, other short-term borrowings, long-term debt and net investments in
foreign subsidiaries are not yet recognized in the financial statements.



            BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES   89

<PAGE>   59
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Net
                                      Securities                 Interest-        Other      Long-     investments
                                       available       Other       bearing   short-term       term      in foreign
(in millions) December 31, 1995         for sale      assets      deposits   borrowings       debt    subsidiaries        Total
-------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>             <C>         <C>        <C>             <C>      <C>                 <C>
INTEREST RATE SWAPS
  Pay Variable Unrealized Gain             $  --        $ --         $ 132          $ 4      $ 339            $ --        $ 475
  Pay Variable Unrealized (Loss)              --          --           (12)          (1)       (24)             --          (37)
-------------------------------------------------------------------------------------------------------------------------------
  Pay Variable Net                            --          --           120            3        315              --          438
-------------------------------------------------------------------------------------------------------------------------------
  Pay Fixed Unrealized Gain                   --          --            11           --         14              --           25
  Pay Fixed Unrealized (Loss)                (88)         --           (82)          (1)       (21)             --         (192)
-------------------------------------------------------------------------------------------------------------------------------
  Pay Fixed Net                              (88)         --           (71)          (1)        (7)             --         (167)
-------------------------------------------------------------------------------------------------------------------------------
  Total Unrealized Gain                       --          --           143            4        353              --          500
-------------------------------------------------------------------------------------------------------------------------------
  Total Unrealized (Loss)                    (88)         --           (94)          (2)       (45)             --         (229)
-------------------------------------------------------------------------------------------------------------------------------
  Total Net                                $ (88)       $ --         $  49          $ 2      $ 308            $ --        $ 271
-------------------------------------------------------------------------------------------------------------------------------
FORWARD RATE AGREEMENTS
  Unrealized Gain                          $  --        $ --         $   1          $--      $  --            $ --        $   1
  Unrealized (Loss)                           --          --            (1)          --         --              --           (1)
-------------------------------------------------------------------------------------------------------------------------------
  Net                                      $  --        $ --         $  --          $--      $  --            $ --        $  --
-------------------------------------------------------------------------------------------------------------------------------
CURRENCY SWAPS AND FORWARDS
  Unrealized Gain                          $  --        $  1         $  17          $--      $  20            $ 14        $  52
  Unrealized (Loss)                           --          --           (12)          (1)       (48)            (30)         (91)
-------------------------------------------------------------------------------------------------------------------------------
  Net                                      $  --        $  1         $   5          $(1)     $ (28)           $(16)       $ (39)
-------------------------------------------------------------------------------------------------------------------------------
OTHER CONTRACTS (1)
  Unrealized Gain                          $  --        $  1         $  --          $--      $  --            $ --        $   1
  Unrealized (Loss)                           (5)        (16)           --           --         --              --          (21)
-------------------------------------------------------------------------------------------------------------------------------
  Net                                      $  (5)       $(15)        $  --          $--      $  --            $ --        $ (20)
-------------------------------------------------------------------------------------------------------------------------------

Total Unrealized Gain                      $  --        $  2         $ 161          $ 4      $ 373            $ 14        $ 554
Total Unrealized (Loss)                      (93)        (16)         (107)          (3)       (93)            (30)        (342)
-------------------------------------------------------------------------------------------------------------------------------
Total Net                                  $ (93)       $(14)        $  54          $ 1      $ 280            $(16)       $ 212
-------------------------------------------------------------------------------------------------------------------------------

(in millions) December 31, 1994
-------------------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS
  Pay Variable Unrealized Gain             $  --        $ --         $  17          $ 4      $  62            $ --          $83
  Pay Variable Unrealized (Loss)              (1)         --          (191)          (4)      (200)             --         (396)
-------------------------------------------------------------------------------------------------------------------------------
  Pay Variable Net                            (1)         --          (174)          --       (138)             --         (313)
-------------------------------------------------------------------------------------------------------------------------------
  Pay Fixed Unrealized Gain                   48          --           105           --         28              --          181
  Pay Fixed Unrealized (Loss)                (19)         --           (31)          --        (15)             --          (65)
-------------------------------------------------------------------------------------------------------------------------------
  Pay Fixed Net                               29          --            74           --         13              --          116
-------------------------------------------------------------------------------------------------------------------------------
Total Unrealized Gain                         48          --           122            4         90              --          264
-------------------------------------------------------------------------------------------------------------------------------
Total Unrealized (Loss)                      (20)         --          (222)          (4)      (215)             --         (461)
-------------------------------------------------------------------------------------------------------------------------------
Total Net                                  $  28        $ --         $(100)         $--      $(125)           $ --        $(197)
-------------------------------------------------------------------------------------------------------------------------------
FORWARD RATE AGREEMENTS
  Unrealized Gain                          $  --        $ --         $   4          $--      $   --            $ --        $  4
  Unrealized (Loss)                           --          --            (5)          --          --              --          (5)
-------------------------------------------------------------------------------------------------------------------------------
  Net                                      $  --        $ --         $  (1)         $--      $   --            $ --        $ (1)
-------------------------------------------------------------------------------------------------------------------------------
CURRENCY SWAPS
  Unrealized Gain                          $  --        $ --         $   9          $--      $   4            $ --        $  13
  Unrealized (Loss)                           --          --            (2)          (1)       (74)            (22)         (99)
-------------------------------------------------------------------------------------------------------------------------------
  Net                                      $  --        $ --         $   7          $(1)     $ (70)           $(22)       $ (86)
-------------------------------------------------------------------------------------------------------------------------------
OTHER CONTRACTS (1)
  Unrealized Gain                          $   5        $  2         $  --          $--      $  --            $ --        $   7
  Unrealized (Loss)                           --         (53)           --           --         --              --          (53)
-------------------------------------------------------------------------------------------------------------------------------
  Net                                      $   5        $(51)        $  --          $--      $  --            $ --        $ (46)
-------------------------------------------------------------------------------------------------------------------------------
Total Unrealized Gain                      $  53        $  2         $ 135          $ 4      $  94            $ --        $ 288
Total Unrealized (Loss)                      (20)        (53)         (229)          (5)      (289)            (22)        (618)
-------------------------------------------------------------------------------------------------------------------------------
Total Net                                  $  33        $(51)        $ (94)         $(1)     $(195)           $(22)       $(330)
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Other contracts are principally equity swaps and collars.


            BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES   90

<PAGE>   60

         The unrealized gains and losses on these hedges were determined on the
basis of valuation pricing models which take into account current market and
contractual prices of the underlying instruments, as well as time value and
yield curve or volatility factors underlying the positions.

         The remaining maturities of the notional amounts of end-user
derivatives at December 31, 1995 were as follows:

<TABLE>
<CAPTION>
                                 Interest      Foreign                    Total
(in millions)                        Rate     Currency      Equity      Notional
Notional Amount Maturing in:         Risk        Risk*        Risk        Amount
--------------------------------------------------------------------------------
<S>                               <C>         <C>           <C>         <C>
1996                              $41,825       $  667         $91       $42,583
1997-1998                          10,218        2,305          --        12,523
1999-2000                           4,821          466          --         5,287
2001 and thereafter                 4,557          109          --         4,666
--------------------------------------------------------------------------------
Total                             $61,421       $3,547         $91       $65,059
--------------------------------------------------------------------------------
</TABLE>
*Currency swaps and currency forwards are primarily based upon Australian
dollar/U.S. dollar and Japanese yen/U.S. dollar contracts.

         For pay variable and pay fixed interest rate swaps entered into as an
end user, the weighted average receive rate and pay rate (interest rates were
based on the weighted averages of both U.S. and non-U.S. currencies) by maturity
and corresponding notional amounts at December 31, 1995 were as follows:


<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
                                                   Paying Variable                        Paying Fixed
                                          ---------------------------------      --------------------------------
($ in millions)                           Notional     Receive          Pay      Notional      Receive        Pay        Total
Notional Amount Maturing in:                Amount        Rate         Rate        Amount         Rate       Rate     Notional
------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>          <C>             <C>       <C>           <C>           <C>       <C>
1996                                       $30,770        5.97%        5.87%      $ 8,742         6.00%      6.21%     $39,512
1997-1998                                    6,558        5.99         5.84         3,657         5.33       5.76       10,215
1999-2000                                    3,448        6.57         6.34         1,373         3.86       4.99        4,821
2001 and thereafter                          3,927        6.64         5.93           629         5.91       7.34        4,556
------------------------------------------------------------------------------------------------------------------------------
Total                                      $44,703                                $14,401                              $59,104
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
All rates were those in effect at December 31, 1995. Variable rates are
primarily based on LIBOR and may change significantly, affecting future cash
flows.


         The remaining maturities of the notional amounts of end-user 
derivatives at December 31, 1994 were as follows:

<TABLE>
<CAPTION>
                                    Interest      Foreign                 Total
(in millions)                           Rate     Currency     Equity    Notional
Notional Amount Maturing in:            Risk         Risk*      Risk      Amount
--------------------------------------------------------------------------------
<S>                                 <C>          <C>          <C>       <C>
1995                                 $19,934       $2,341      $146     $22,421
1996-1997                             11,153          449        73      11,675
1998-1999                              3,437          340        --       3,777
2000 and thereafter                    5,843          364        --       6,207
--------------------------------------------------------------------------------
Total                                $40,367       $3,494      $219     $44,080
--------------------------------------------------------------------------------
</TABLE>
*Currency swaps and currency forwards are primarily based upon Australian
dollar/U.S. dollar and Japanese yen/U.S. dollar contracts.

         For pay variable and pay fixed interest rate swaps entered into as end
user, the weighted average receive rate and pay rate (interest rates were based
on the weighted averages of both U.S. and non-U.S. currencies) by maturity and
corresponding notional amounts at December 31, 1994 were as follows:


<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
                                                   Paying Variable                        Paying Fixed
                                          ---------------------------------      --------------------------------
($ in millions)                           Notional     Receive          Pay      Notional      Receive        Pay        Total
Notional Amount Maturing in:                Amount        Rate         Rate        Amount         Rate       Rate     Notional
------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>          <C>             <C>       <C>           <C>           <C>       <C>
1995                                       $11,211        5.88%        6.09%       $2,908         5.90%      6.00%     $14,119
1996-1997                                    7,830        6.03         5.77         3,219         5.92       5.78       11,049
1998-1999                                    2,444        5.81         5.83           993         5.34       5.38        3,437
2000 and thereafter                          4,113        6.79         5.72         1,730         5.83       8.13        5,843
------------------------------------------------------------------------------------------------------------------------------
Total                                      $25,598                                 $8,850                              $34,448
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
All rates were those in effect at December 31, 1994. Variable rates are
primarily based on LIBOR and may change significantly, affecting future
cash flows.


            BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES  91

<PAGE>   61
         The effect of these end-user derivatives was a net increase in revenue
of $22 million and $102 million, respectively, for the years ended December 31,
1995 and 1994.

         The Corporation has reviewed its other categories of off-balance sheet
instruments (forward-dated assets and liabilities, securities lending
indemnifications and securities borrowed) accounted for at cost and has
determined that, in the case of each such category, the unrealized gain or loss
on such instruments at both December 31, 1995 and 1994 was not material.

Methods and Assumptions
For short-term financial instruments, defined as those with remaining 
maturities of 90 days or less, the carrying amount was considered to be a
reasonable estimate of fair value. The following instruments were predominantly
short-term:


<TABLE>
<CAPTION>
Assets                                       Liabilities
--------------------------------------------------------------------------------
<S>                                          <C>
Cash and due from banks                      Interest-bearing deposits
Interest-bearing deposits                    Securities sold under
  with banks                                   repurchase agreements
Federal funds sold                           Other short-term borrowings
Securities purchased under                   Acceptances outstanding
  resale agreements                          Other financial liabilities
Securities borrowed
Due from customers
  on acceptances
Accounts receivable and
  accrued interest
</TABLE>

         For those components of the above-listed financial instruments with
remaining maturities greater than 90 days, fair value was determined by
discounting contractual cash flows using rates which could be earned for assets
with similar remaining maturities and, in the case of liabilities, rates at
which the liabilities with similar remaining maturities could be issued as of
the balance sheet date.

         As indicated in Note 1, trading assets (including derivatives), trading
liabilities and securities available for sale are carried at their fair values.

         For short-term loans and variable rate loans which reprice within 90
days, the carrying value was considered to be a reasonable estimate of fair
value. For those loans for which quoted market prices were available, fair value
was based on such prices. For other types of loans, fair value was estimated by
discounting future cash flows using the current rates at which similar loans
would be made to borrowers with similar credit ratings and for the same
remaining maturities. In addition, for loans secured by real estate, appraisal
values for the collateral were considered in the fair value determination. The
fair value estimate of commitments to extend credit and standby letters of
credit represented the unrealized gains and losses on those off-balance sheet
positions and was generally determined in the same manner as loans.

         Other financial assets consisted primarily of investments in equity
instruments (excluding, in accordance with SFAS 107, investments accounted for
under the equity method) and cash and cash margins with brokers. The fair value
of non-marketable equity instruments was determined by matrix pricing utilizing
market prices for comparable publicly traded instruments, adjusted for liquidity
and contractual arrangements.

         Noninterest-bearing deposits do not have defined maturities. In
accordance with SFAS 107, fair value represented the amount payable on demand as
of the balance sheet date.

         Other financial liabilities consisted primarily of accounts payable and
accrued expenses at both December 31, 1995 and 1994.

         The fair value of long-term debt was estimated by using market quotes
as well as discounting the remaining contractual cash flows using a rate at
which the Corporation could issue debt with a similar remaining maturity as of
the balance sheet date.


            BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES  92

<PAGE>   62
NOTE 25 -- CONDENSED PARENT COMPANY
FINANCIAL STATEMENTS

Condensed Statement of Income
<TABLE>
<CAPTION>
 (in millions) Year Ended December 31,           1995         1994       1993
 -----------------------------------------------------------------------------
   <S>                                          <C>          <C>        <C>
 REVENUE
 Dividends
   Banks                                        $   75       $  320     $  112
   Nonbanks                                         86          264         71
 Interest from subsidiaries                        551          367        191
 Other interest                                    150          209        119
 Trading                                            44          (81)         4
 Securities available for sale gains (losses)      114           17         (2)
 Other                                              85          (17)        40
 -----------------------------------------------------------------------------
 Total revenue                                   1,105        1,079        535
 -----------------------------------------------------------------------------
 EXPENSES
 Interest to subsidiaries                           71           40         23
 Other interest                                    714          566        310
 Other                                              --           20         36
 -----------------------------------------------------------------------------
 Total expenses                                    785          626        369
 -----------------------------------------------------------------------------
 Income before income taxes and
   equity in undistributed income of
   subsidiaries and affiliates                     320          453        166
 Income taxes (benefit)                             25          (99)       (13)
 -----------------------------------------------------------------------------
 Income before equity in undistributed
   income of subsidiaries and affiliates           295          552        179
 Equity in undistributed (loss) income
   of subsidiaries and affiliates before
   cumulative effects of accounting changes        (80)         63         891
 -----------------------------------------------------------------------------
 INCOME BEFORE CUMULATIVE EFFECTS
   OF ACCOUNTING CHANGES                           215          615      1,070
 Equity in cumulative effects of
   accounting changes of subsidiary                 --          --         (75)
 -----------------------------------------------------------------------------
 NET INCOME                                     $  215       $  615     $  995
 -----------------------------------------------------------------------------
</TABLE>


Condensed Balance Sheet
<TABLE>
<CAPTION>
 (in millions) December 31,                                   1995       1994
 ------------------------------------------------------------------------------
 <S>                                                        <C>         <C>
 ASSETS
 Cash and due from banks                                    $     8     $    72
 Interest-bearing deposits with bank subsidiaries             2,540       1,509
 Securities purchased under resale agreements
   with nonbank subsidiary                                    2,213       1,104
 Securities purchased under resale agreements
   with third party                                              48         --
 Trading assets                                               1,475       1,579
 Securities available for sale                                1,301       2,023
 Loans                                                           24          21
 Investments in subsidiaries and affiliates
   Banks                                                      4,641       4,453
   Nonbanks                                                     946       1,017
 Receivables from subsidiaries and affiliates
   Banks                                                      1,418       1,512
   Nonbanks                                                   3,190       5,672
 Accounts receivable and accrued interest                       348         379
 Other assets                                                   148         313
 ------------------------------------------------------------------------------
 Total assets                                               $18,300     $19,654
 ------------------------------------------------------------------------------
 LIABILITIES AND STOCKHOLDERS' EQUITY
 Trading liabilities                                        $   348     $   128
 Commercial paper                                             5,306       6,320
 Other short-term borrowings                                    960       3,250
 Payables to subsidiaries and affiliates
   Banks                                                        170         126
   Nonbanks                                                   1,794         826
 Other liabilities                                              278         312
 Long-term debt                                               4,460       3,988
 ------------------------------------------------------------------------------
 Total liabilities                                           13,316      14,950
 ------------------------------------------------------------------------------
 Total stockholders' equity                                   4,984       4,704
 ------------------------------------------------------------------------------
 Total liabilities and stockholders' equity                 $18,300     $19,654
 ------------------------------------------------------------------------------
</TABLE>


Condensed Statement of Cash Flows
<TABLE>
<CAPTION>
 (in millions) Year Ended December 31,                             1995        1994          1993
 --------------------------------------------------------------------------------------------------
<S>                                                             <C>          <C>            <C>
 CASH FLOWS FROM OPERATING ACTIVITIES
 Net income                                                     $   215       $   615       $   995
 Adjustments to reconcile net income to net
   cash provided by (used in) operating activities:
     Equity in undistributed loss (income)
       of subsidiaries and affiliates, before
       cumulative effects of accounting changes                      80          (63)          (891)
     Equity in cumulative effects of
       accounting changes of subsidiary                              --            --            75
     Deferred income taxes                                            3           (59)           42
     Net change in trading assets                                   104           342        (1,390)
     Net change in trading liabilities                              220           (42)          168
     Securities available for sale (gains) losses                  (114)          (17)            2
     Other, net                                                     282           107           111
 --------------------------------------------------------------------------------------------------
 Net cash provided by (used in)
   operating activities                                             790           883          (888)
 --------------------------------------------------------------------------------------------------
 CASH FLOWS FROM INVESTING ACTIVITIES
 Net change in:
   Interest-bearing deposits with bank subsidiaries              (1,031)         (847)         (140)
   Securities purchased under resale agreements
     with nonbank subsidiary                                     (1,109)         (784)          888
   Securities purchased under resale agreements
     with third party                                               (48)           --            --
   Short-term notes receivable from subsidiaries
     and affiliates                                               1,591           745          (361)
 Securities available for sale:
   Purchases                                                       (388)       (2,304)           --
   Maturities and other redemptions                                 360           396            --
   Sales                                                            876           501            --
 Investment securities:
   Purchases                                                         --            --        (3,309)
   Maturities and other redemptions                                  --            --         3,427
   Sales                                                             --            --            47
 Increases in long-term notes receivable
   from subsidiaries                                               (484)       (2,133)       (2,322)
 Decreases in long-term notes receivable
   from subsidiaries                                              1,379           640            89
 Capital contributed to subsidiaries and affiliates                (290)         (152)           (7)
 Return of capital from subsidiaries and affiliates                  --             2            --
 Other, net                                                          22            34            (8)
 --------------------------------------------------------------------------------------------------
 Net cash provided by (used in) investing activities                878        (3,902)       (1,696)
 --------------------------------------------------------------------------------------------------
 CASH FLOWS FROM FINANCING ACTIVITIES
 Net change in:
   Commercial paper and other short-term
     borrowings                                                  (3,304)        3,327         2,073
   Short-term notes payable to subsidiaries                       1,012           133           156
 Issuance of long-term debt                                       1,496           421         1,338
 Repayments of long-term debt                                      (791)         (370)         (205)
 Issuance of preferred stock                                        221           342            --
 Redemption of preferred stock                                       --          (205)         (250)
 Issuance to subsidiary of preferred stock                           --            --           247
 Redemption from subsidiary of preferred stock                       --            --          (247)
 Purchases of treasury stock                                        (38)         (267)         (313)
 Cash dividends paid                                               (361)         (322)         (281)
 Other, net                                                          33            22            74
 --------------------------------------------------------------------------------------------------
 Net cash (used in) provided by financing activities             (1,732)        3,081         2,592
 --------------------------------------------------------------------------------------------------
 NET INCREASE (DECREASE)
   IN CASH AND DUE FROM BANKS                                       (64)           62             8
 Cash and due from banks, beginning of year                          72            10             2
 --------------------------------------------------------------------------------------------------
 Cash and due from banks, end of year                           $     8       $    72       $    10
 --------------------------------------------------------------------------------------------------
 Interest paid                                                  $   772       $   587       $   326
 --------------------------------------------------------------------------------------------------
 Income taxes paid                                              $     9       $     7       $    --
 --------------------------------------------------------------------------------------------------
 Noncash financing activity:
   Conversion of debt to preferred stock                        $   245       $    --       $    --
 --------------------------------------------------------------------------------------------------
</TABLE>


            BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES   93

<PAGE>   63
NOTE 26 -- BANKERS TRUST COMPANY CONSOLIDATED
SUMMARIZED FINANCIAL INFORMATION

Consolidated Statement of Income
<TABLE>
<CAPTION>
  (in millions) Year Ended December 31,            1995         1994       1993
  ------------------------------------------------------------------------------
  <S>                                             <C>          <C>        <C>
  NET INTEREST REVENUE
  Interest revenue                                $3,917       $2,900     $2,812
  Interest expense                                 3,330        2,271      2,072
  ------------------------------------------------------------------------------
  NET INTEREST REVENUE                               587          629        740
  Provision for credit losses                        (31)          (3)        96
  ------------------------------------------------------------------------------
  NET INTEREST REVENUE AFTER PROVISION
    FOR CREDIT LOSSES                                618          632        644
  ------------------------------------------------------------------------------
  NONINTEREST REVENUE
  Trading                                            279          786      1,875
  Fiduciary and funds management                     642          698        661
  Fees and commissions                               484          541        477
  Securities available for sale gains (losses)        (4)          13         --
  Investment securities gains                         --           --          4
  Other                                              163          213        107
  ------------------------------------------------------------------------------
  Total noninterest revenue                        1,564        2,251      3,124
  ------------------------------------------------------------------------------
  NONINTEREST EXPENSES
  Salaries                                           683          656        570
  Incentive compensation and employee
    benefits                                         524          563        943
  Occupancy, net                                     141          134        142
  Furniture and equipment                            146          149        131
  Provision for severance related costs               43           --         --
  Other                                              736          823        911
  ------------------------------------------------------------------------------
  Total noninterest expenses                       2,273        2,325      2,697
  ------------------------------------------------------------------------------
  Income (Loss) before income taxes and
    cumulative effects of accounting changes         (91)         558      1,071
  Income taxes (benefit)                             (53)         166        327
  ------------------------------------------------------------------------------
  INCOME (LOSS) BEFORE CUMULATIVE
    EFFECTS OF ACCOUNTING
    CHANGES                                          (38)         392        744
  Cumulative effects of accounting
    changes                                           --           --        (75)
  ------------------------------------------------------------------------------
  NET INCOME (LOSS)                               $  (38)      $  392     $  669
  ------------------------------------------------------------------------------
</TABLE>

In the normal course of business, BTCo enters into various transactions with the
Parent Company and the Parent Company's other subsidiaries. Included in the
above financial statements were the following transactions and balances with
such affiliates.

<TABLE>
<CAPTION>
(in millions) Year Ended December 31,            1995          1994       1993
-------------------------------------------------------------------------------
<S>                                              <C>         <C>         <C>
Interest revenue                                 $129        $   97      $   45
Interest expense                                  276           185         143
Noninterest revenue                                65            18           5
Noninterest expenses                              203           289         326

(in millions) December 31,                                     1995        1994
-------------------------------------------------------------------------------
Interest-earning assets                                      $1,357      $1,433
Noninterest-earning assets                                      554       1,348
Interest-bearing liabilities                                  4,778       4,566
Noninterest-bearing liabilities                                 495       1,757
</TABLE>


Consolidated Balance Sheet
<TABLE>
<CAPTION>
  ($ in millions, except par values) December 31,            1995        1994
  -----------------------------------------------------------------------------
  <S>                                                       <C>        <C>
  ASSETS
  Cash and due from banks                                   $ 2,305     $ 2,023
  Interest-bearing deposits with banks                        1,982       3,680
  Federal funds sold                                            854       2,544
  Securities purchased under resale agreements               14,597       8,006
  Trading assets                                             35,142      34,364
  Securities available for sale                               3,280       3,858
  Loans                                                      11,393      12,035
  Allowance for credit losses                                  (941)     (1,179)
  Premises and equipment, net                                   834         872
  Due from customers on acceptances                             500         378
  Accounts receivable and accrued interest                    3,790       1,429
  Other assets                                                2,141       2,898
  -----------------------------------------------------------------------------
  Total assets                                              $75,877     $70,908
  -----------------------------------------------------------------------------
  LIABILITIES
  Deposits
    Noninterest-bearing
      In domestic offices                                   $ 2,815     $ 3,454
      In foreign offices                                        645         555
    Interest-bearing
      In domestic offices                                     4,615       4,837
      In foreign offices                                     20,018      17,590
  -----------------------------------------------------------------------------
        Total deposits                                       28,093      26,436
  Trading liabilities                                        19,087      20,461
  Securities sold under repurchase agreements                 7,275       4,263
  Other short-term borrowings                                 8,342       8,910
  Acceptances outstanding                                       500         378
  Accounts payable and accrued expenses                       1,810       1,686
  Other liabilities                                           1,006       1,394
  Long-term debt                                              5,428       3,230
  -----------------------------------------------------------------------------
  Total liabilities                                          71,541      66,758
  -----------------------------------------------------------------------------
  STOCKHOLDER'S EQUITY
  Floating rate non-cumulative preferred stock --
     Series A, $1 million par value
     Authorized, issued and outstanding:
      1995, 500 shares; 1994, 250 shares                        500         250
  Common stock, $10 par value
     Authorized, issued and outstanding:
      85,166,667 shares                                         852         852
  Capital surplus                                               528         498
  Retained earnings                                           2,822       2,875
  Cumulative translation adjustments                           (365)       (344)
  Securities valuation allowance                                 (1)         19
  -----------------------------------------------------------------------------
  Total stockholder's equity                                  4,336       4,150
  -----------------------------------------------------------------------------
  Total liabilities and stockholder's equity                $75,877     $70,908
  -----------------------------------------------------------------------------
</TABLE>

         See Note 9 for details of BTCo's long-term debt issued to
nonaffiliates. Note 2 discusses the effects of the Corporation's adoption of
SFAS 114 effective January 1, 1995, SFAS 115 effective December 31, 1993, SFAS
106 and SFAS 112 effective January 1, 1993. The cumulative effects of accounting
changes as a result of the adoption of SFAS 106 and SFAS 112, as presented in
Note 2, were recorded by BTCo.


            BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES  94
<PAGE>   64
--------------------------------------------------------------------------------
MANAGEMENT'S REPORT ON RESPONSIBILITY FOR FINANCIAL REPORTING
--------------------------------------------------------------------------------

         The management of Bankers Trust New York Corporation and its
subsidiaries (the "Corporation") is responsible for preparing the accompanying
financial statements. The financial statements were prepared in accordance with
generally accepted accounting principles and prevailing industry practices, as
applicable to the Corporation. The financial statements include amounts that are
based on management's best estimates and judgments. Management also prepared the
other information in the Annual Report and is responsible for its accuracy and
consistency with the financial statements.

         The management of the Corporation has established and maintains an
internal control structure and monitors that structure for compliance with
established policies and procedures. The objectives of an internal control
structure are to provide reasonable, but not absolute, assurance as to the
integrity and reliability of the financial statements, the protection of assets
from unauthorized use or disposition, and that transactions are executed in
accordance with management's authorization. The Corporation maintains an
Internal Audit Department that independently monitors and assesses the
effectiveness of the internal controls and recommends possible improvements
thereto. The Corporation also maintains a Credit Policy Department which
develops and administers procedures to measure, monitor and control credit risks
across all businesses and recommends to management specific measures for
portfolio restructuring designed to reduce the risk of loss. In addition,
management recognizes its responsibility to foster a strong ethical environment
within the Corporation to ensure that its business affairs are conducted with
integrity and in accordance with high standards of personal and corporate
conduct. This responsibility is characterized and reflected in the Corporation's
Rules for Business Conduct, which are distributed to all employees of the
Corporation. As part of the monitoring system, the Corporation maintains a
Corporate Compliance Department having oversight responsibilities for
administering and coordinating the application of these standards of conduct.

         The Corporation's Board of Directors appoints an Audit Committee
composed solely of outside directors. The function of the Audit Committee is to
oversee the accounting, reporting, audit and internal control policies and
procedures established by the Corporation's management. The Committee meets
regularly with management and the internal, credit and independent auditors. The
auditors have free access to the Audit Committee without the presence of
management. The Committee reports regularly to the Board of Directors on its
activities, and such other matters as it deems necessary.

         The Corporation's annual financial statements have been audited by
Ernst & Young LLP, independent auditors, whose appointment by the Board of
Directors was approved by the stockholders. Management has made available to
Ernst & Young LLP all the Corporation's financial records and related data, as
well as the minutes of stockholders' and directors' meetings. Furthermore,
management believes that all its representations to Ernst & Young LLP are valid
and appropriate. In addition, Ernst & Young LLP, in determining the nature and
extent of their auditing procedures, evaluated the Corporation's accounting
procedures and policies and the effectiveness of the related internal control
structure.

         Management believes that, as of December 31, 1995, the Corporation's
internal control structure was adequate to accomplish the objectives discussed
herein.




Charles S. Sanford, Jr.
Chairman of the Board



Frank N. Newman
President and Chief Executive Officer



Richard H. Daniel
Executive Vice President,
Chief Financial Officer and
Controller

March 7, 1996




            BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES  95

<PAGE>   65
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
--------------------------------------------------------------------------------

To the Board of Directors and Stockholders of
Bankers Trust New York Corporation

We have audited the accompanying consolidated balance sheet of Bankers Trust New
York Corporation and Subsidiaries (the "Corporation") at December 31, 1995 and
1994, and the related consolidated statements of income, changes in
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1995. These financial statements are the responsibility of
the Corporation's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

         We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audits provide a reasonable basis for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Bankers
Trust New York Corporation and Subsidiaries at December 31, 1995 and 1994, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.

         As discussed in Note 2 to the financial statements, in 1993 the
Corporation adopted, as of December 31, 1993, Statement of Financial Accounting
Standards ("SFAS") 115, "Accounting for Certain Investments in Debt and Equity
Securities," and as of January 1, 1993, SFAS 106, "Employers' Accounting for
Postemployment Benefits Other than Pensions," and SFAS 112, "Employers'
Accounting for Postemployment Benefits."

                                            ERNST & YOUNG LLP

New York, New York
January 25, 1996




            BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES  96
<PAGE>   66
SUPPLEMENTAL FINANCIAL DATA

The statistical data on pages 97 through 101 should be read in conjunction with
the Financial Review and the financial statements included elsewhere in this
Annual Report.

   In the opinion of management, all material adjustments necessary for a fair
presentation of the results of operations for the interim periods have been
made. All such adjustments were of a normal recurring nature.

CONDENSED QUARTERLY CONSOLIDATED STATEMENT OF INCOME

(in millions, except per share data)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                           1995                                           1994
                                      ----------------------------------------------  ----------------------------------------------
                                        Fourth       Third     Second       First       Fourth      Third       Second      First
                                        Quarter     Quarter    Quarter     Quarter      Quarter    Quarter      Quarter     Quarter
------------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>   
Interest revenue                      $1,457      $1,556      $1,520      $1,353      $1,357      $1,207      $1,255      $1,211
Interest expense                       1,248       1,352       1,298       1,171       1,128         943         946         841
------------------------------------------------------------------------------------------------------------------------------------
Net interest revenue                     209         204         222         182         229         264         309         370
Provision for credit losses               10           7          --          14           8          17          --          --
------------------------------------------------------------------------------------------------------------------------------------
Net interest revenue after provision                                                              
   for credit losses                     199         197         222         168         221         247         309         370
Total noninterest revenue                739         755         587         342         624         707         637         505
Total noninterest expenses               758         728         678         734         709         713         688         641
------------------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes        180         224         131        (224)        136         241         258         234
Income taxes (benefit)                    54          69          40         (67)         35          72          77          70
------------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS)                     $  126      $  155      $   91      $ (157)     $  101      $  169      $  181      $  164
------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) applicable to                                                                   
   common stock                       $  111      $  139      $   79      $ (165)     $   95      $  161      $  172      $  159
------------------------------------------------------------------------------------------------------------------------------------
EARNINGS (LOSS)                                                                                   
  PER COMMON SHARE:                                                                               
   Primary                            $ 1.36      $ 1.72      $  .98      $(2.11)     $ 1.19      $ 1.98      $ 2.09      $ 1.90
   Fully diluted                      $ 1.36      $ 1.71      $  .98      $(2.11)     $ 1.18      $ 1.98      $ 2.09      $ 1.90
------------------------------------------------------------------------------------------------------------------------------------
Cash dividends declared per                                                                       
   common share                       $ 1.00      $ 1.00      $ 1.00      $ 1.00      $ 1.00      $  .90      $  .90      $  .90
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  
STOCKHOLDER DATA                                                                                  
------------------------------------------------------------------------------------------------------------------------------------
Market price (1)                                                                                  
  High                                $   71      $   72      $   64 3/4  $   64 7/8  $   67 5/8  $   74       $  74      $   84 5/8
  Low                                     60 1/4      60 3/4      52          49 3/4      54 3/4      63 1/2      64 1/2      69 1/8
  End of quarter                          66 1/2      70 1/4      62          52 1/4      55 3/8      66 3/4      66 5/8      71
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Based on the Composite Tape. Market prices at January 31, 1996 for common
    stock were as follows: High, $64 7/8; Low, $63; Close, $64 7/8.

DIVIDENDS
   Cash dividends on common stock were paid quarterly in 1995 on the 25th of
   January, April, July and October.

NUMBER OF SECURITY HOLDERS
   At January 31, 1996, the approximate number of holders of record of common
   stock was 21,978.

STOCK LISTINGS
   The principal markets on which the common stock is traded are the New York
   Stock Exchange (Symbol: BT) and the London Stock Exchange.

                         BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES  97
<PAGE>   67
AVERAGE BALANCES, INTEREST AND AVERAGE RATES
   The following table shows the major consolidated assets and liabilities,
   together with their respective interest amounts and rates earned or paid by
   the Corporation. Cash basis and renegotiated loans are included in the
   averages to determine an effective yield on all loans. The average balances
   are principally daily averages.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
                                                         1995                          1994              
                                             -----------------------------  -----------------------------
                                               Average             Average   Average              Average
($ in millions)                                Balance   Interest   Rate     Balance    Interest   Rate  
---------------------------------------------------------------------------------------------------------
<S>                                          <C>         <C>       <C>      <C>         <C>       <C>    
ASSETS
Interest-bearing deposits with banks
 (primarily in foreign offices)              $  2,777    $  207     7.45%   $  1,523     $  124    8.14% 
Federal funds sold                                                
 (in domestic offices)                          1,726       104     6.03%        634         31    4.89% 
Securities purchased under resale                                                                        
 agreements (primarily in                                                                                
  domestic offices)                            19,808     1,057     5.34%     13,260        468    3.53% 
Securities borrowed                                                                                      
 (in domestic offices)                          8,952       509     5.69%      5,018        211    4.20% 
Trading assets                                                                                           
  In domestic offices (1)                      14,555     1,370     9.41%     20,739      1,911    9.21% 
  In foreign offices                           16,058     1,320     8.22%     15,787      1,054    6.68% 
---------------------------------------------------------------             -------------------          
Total trading assets (1)                       30,613     2,690     8.79%     36,526      2,965    8.12% 
Securities available for sale                                                                            
  In domestic offices                                                                    
    Taxable                                     1,891       160     8.46%      2,043        134    6.56% 
    Exempt from federal income taxes (1)        1,340        56     4.18%      1,374         75    5.46% 
  In foreign offices                                                        
    Taxable                                     2,899       167     5.76%      3,042        178    5.85% 
    Exempt from federal income taxes (1)          320        35    10.94%        410         49   11.95% 
---------------------------------------------------------------             -------------------          
Total securities available for sale (1)         6,450       418     6.48%      6,869        436    6.35% 
Investment securities                                                       
  In domestic offices                                                       
    Taxable                                        --        --       --          --         --      --  
    Exempt from federal income taxes (1)           --        --       --          --         --      --  
  In foreign offices                                              
    Taxable                                        --        --       --          --         --      --  
    Exempt from federal income taxes (1)           --        --       --          --         --      --  
---------------------------------------------------------------             -------------------          
Total investment securities (1)                    --        --       --          --         --      --  
Loans                                                             
  In domestic offices                                             
    Commercial and industrial                   2,178       160     7.35%      2,123        141    6.64% 
    Financial institutions                        620        51     8.23%        920         49    5.33% 
    Secured by real estate                      1,398        95     6.80%      1,503         82    5.46% 
    Other (1)                                   2,293       131     5.71%      2,311        147    6.36% 
---------------------------------------------------------------             -------------------          
    Total in domestic offices (1)               6,489       437     6.73%      6,857        419    6.11% 
  In foreign offices                            5,263       487     9.25%      5,613        444    7.91% 
---------------------------------------------------------------             -------------------          
Total loans, excluding fees (1)                11,752       924     7.86%     12,470        863    6.92% 
  Loan fees                                                  18                              15          
---------------------------------------------------------------             -------------------          
Total loans, including fees (1)                11,752       942     8.02%     12,470        878    7.04% 
---------------------------------------------------------------             -------------------          
TOTAL INTEREST-EARNING                                                                                   
  ASSETS(1)                                    82,078    $5,927     7.22%     76,300     $5,113    6.70% 
                                                         ======                          ======          
Cash and due from banks                         1,767                          1,912                     
Noninterest-earning trading assets             18,999                         19,992                     
Due from customers on acceptances                 434                            348                     
All other assets                                7,567                          7,618                     
Allowance for credit losses                    (1,196)                        (1,342)                   
-----------------------------------------------------                       --------                     
TOTAL ASSETS                                 $109,649                       $104,828                     
-----------------------------------------------------                       --------                     
% of assets attributable to foreign offices        54%                            51%                    
</TABLE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
                                                                                       1993
                                                                            ----------------------------
                                                                             Average             Average
($ in millions)                                                               Balance   Interest   Rate
--------------------------------------------------------------------------------------------------------
<S>                                                                          <C>        <C>       <C>  
ASSETS
Interest-bearing deposits with banks
 (primarily in foreign offices)                                              $ 2,698     $  214    7.93%
Federal funds sold                           
 (in domestic offices)                                                           708         22    3.11%
Securities purchased under resale            
 agreements (primarily in                    
  domestic offices)                                                            9,969        381    3.82%
Securities borrowed                          
 (in domestic offices)                                                         4,216        127    3.01%
Trading assets                               
  In domestic offices (1)                                                     20,810      1,414    6.79%
  In foreign offices                                                          16,490      1,033    6.26%
--------------------------------------------------------------------------------------------------------
Total trading assets (1)                                                      37,300      2,447    6.56%
Securities available for sale                
  In domestic offices                        
    Taxable                                                                        --         --      --
    Exempt from federal income taxes (1)                                           --         --      --
  In foreign offices                         
    Taxable                                                                        --         --      --
    Exempt from federal income taxes (1)                                           --         --      --
--------------------------------------------------------------------------------------------------------
Total securities available for sale (1)                                            --         --      --
Investment securities                        
  In domestic offices                        
    Taxable                                                                    2,644        129    4.88%
    Exempt from federal income taxes (1)                                         598         59    9.87%
  In foreign offices                         
    Taxable                                                                    2,959        200    6.76%
    Exempt from federal income taxes (1)                                         396         50   12.63%
--------------------------------------------------------------------------------------------------------
Total investment securities (1)                                                6,597        438    6.64%
Loans                                        
  In domestic offices                        
    Commercial and industrial                                                  3,065        157    5.12%
    Financial institutions                                                     1,635         81    4.95%
    Secured by real estate                                                     1,787         89    4.98%
    Other (1)                                                                  2,986        121    4.05%
--------------------------------------------------------------------------------------------------------
    Total in domestic offices (1)                                              9,473        448    4.73%
  In foreign offices                                                           5,837        430    7.37%
--------------------------------------------------------------------------------------------------------
Total loans, excluding fees (1)                                               15,310        878    5.73%
  Loan fees                                                                                  11
--------------------------------------------------------------------------------------------------------
Total loans, including fees (1)                                               15,310        889    5.81%
--------------------------------------------------------------------------------------------------------
TOTAL INTEREST-EARNING                       
  ASSETS(1)                                                                   76,798     $4,518    5.88%
                                                                                         ======
Cash and due from banks                                                        1,767
Noninterest-earning trading assets                                             2,377
Due from customers on acceptances                                                372
All other assets                                                               5,844
Allowance for credit losses                                                   (1,535)
------------------------------------------------------------------------------------
TOTAL ASSETS                                                                 $85,623
------------------------------------------------------------------------------------
% of assets attributable to foreign offices                                       45%
</TABLE>                                        

The average balance sheets are presented on a slightly different basis than the
balance sheets presented in the Financial Statements section of this report, in
that the various categories of interest-earning assets and interest-bearing
liabilities exclude certain noninterest-earning/bearing components included in
the balance sheet captions. These components, excluding
noninterest-earning/bearing trading assets/liabilities, are included in "all
other assets" and "all other liabilities" in the average balance sheets. 

(1) Interest and average rates are presented on a fully taxable basis. The
    applicable combined federal, state and local incremental tax rate used to
    determine the amounts of the tax equivalent adjustments to interest revenue
    (which recognize the income tax savings on tax-exempt assets) was 42 percent
    for 1995, 1994 and 1993.


98  BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   68
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
                                                         1995                          1994              
                                             -----------------------------  -----------------------------
                                               Average             Average   Average              Average
($ in millions)                                Balance   Interest   Rate     Balance    Interest   Rate  
---------------------------------------------------------------------------------------------------------
<S>                                          <C>         <C>       <C>      <C>         <C>       <C>    
LIABILITIES AND
  STOCKHOLDERS' EQUITY
Interest-bearing deposits
  In domestic offices
    Time deposits                           $  1,384      $   99    7.15%   $   700      $   50    7.14% 
    Other                                      4,338         277    6.39%     5,519         218    3.95% 
----------------------------------------------------------------            -------------------          
    Total in domestic offices                  5,722         376    6.57%     6,219         268    4.31% 
  In foreign offices                                                                       
    Deposits from banks in                                                                 
     foreign countries                         7,432         496    6.67%     5,248         296    5.64% 
    Other time and savings deposits            7,370         408    5.54%     6,027         345    5.72% 
    Other                                      1,513          80    5.29%     1,221          55    4.50% 
----------------------------------------------------------------            -------------------          
    Total in foreign offices                  16,315         984    6.03%    12,496         696    5.57% 
----------------------------------------------------------------            -------------------          
Total interest-bearing deposits               22,037       1,360    6.17%    18,715         964    5.15% 
Trading liabilities                                                                        
  In domestic offices                          6,293         622    9.88%     4,453         486   10.91% 
  In foreign offices                           4,922         431    8.76%     5,682         321    5.65% 
----------------------------------------------------------------            -------------------          
Total trading liabilities                     11,215       1,053    9.39%    10,135         807    7.96% 
Securities sold under                                                                      
  repurchase agreements                                                                    
  In domestic offices                         16,951         987    5.82%    20,009         797    3.98% 
  In foreign offices                           4,592         186    4.05%     1,805         120    6.65% 
----------------------------------------------------------------            -------------------          
Total securities sold under                                                                
 repurchase agreements                        21,543       1,173    5.44%    21,814         917    4.20% 
Other short-term borrowings                                                                
  In domestic offices                         11,943         707    5.92%    12,768         582    4.56% 
  In foreign offices                           4,396         326    7.42%     4,488         312    6.95% 
----------------------------------------------------------------            -------------------          
Total other short-term borrowings             16,339       1,033    6.32%    17,256         894    5.18% 
Long-term debt                                                                             
  In domestic offices                          5,120         333    6.50%     4,985         243    4.87% 
  In foreign offices                           2,596         117    4.51%       843          33    3.91% 
----------------------------------------------------------------            -------------------          
Total long-term debt                           7,716         450    5.83%     5,828         276    4.74% 
----------------------------------------------------------------            -------------------          
TOTAL INTEREST-BEARING                                                                     
  LIABILITIES                                 78,850      $5,069    6.43%    73,748      $3,858    5.23% 
                                                          ======                         ======
Noninterest-bearing deposits                                                
  In domestic offices                          2,921                          3,210                      
  In foreign offices                             509                            587                      
----------------------------------------------------                       --------                      
Total noninterest-bearing deposits             3,430                          3,797                      
Noninterest-bearing trading liabilities       16,200                         15,680                      
Acceptances outstanding                          441                            363                      
All other liabilities                          5,628                          6,247                      
Preferred stock of subsidiary                    250                            250                      
Stockholders' Equity                                                        
  Preferred stock                                726                            388                      
  Common stockholders' equity                  4,124                          4,355                      
----------------------------------------------------                       --------                      
TOTAL LIABILITIES AND                                                       
  STOCKHOLDERS' EQUITY                      $109,649                       $104,828                     
----------------------------------------------------                       --------                      
% of liabilities attributable                                               
  to foreign offices                              54%                            42%                     
Rate spread                                                          .79%                          1.47% 
Net interest margin (net interest                                           
  revenue to total interest-                                                
  earning assets)                                                           
 In domestic offices                        $ 46,876      $  371     .79%  $ 45,722      $  728    1.59% 
 In foreign offices                           35,202         487    1.38%    30,578         527    1.72% 
----------------------------------------------------------------            -------------------          
Total                                       $ 82,078      $  858    1.05%  $ 76,300      $1,255    1.64% 
----------------------------------------------------------------            -------------------          
</TABLE>                                                                 

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
                                                                                       1993
                                                                            ----------------------------
                                                                             Average             Average
($ in millions)                                                              Balance   Interest   Rate
--------------------------------------------------------------------------------------------------------
<S>                                                                          <C>        <C>       <C>  
LIABILITIES AND                              
  STOCKHOLDERS' EQUITY
Interest-bearing deposits
  In domestic offices
    Time deposits                                                            $ 2,425     $  115    4.74%
    Other                                                                      5,835        103    1.77%
--------------------------------------------------------------------------------------------------------
    Total in domestic offices                                                  8,260        218    2.64%
  In foreign offices                         
    Deposits from banks in                   
     foreign countries                                                         5,937        398    6.70%
    Other time and savings deposits                                            6,259        319    5.10%
    Other                                                                      1,405         78    5.55%
--------------------------------------------------------------------------------------------------------
    Total in foreign offices                                                  13,601        795    5.85%
--------------------------------------------------------------------------------------------------------
Total interest-bearing deposits                                               21,861      1,013    4.63%
Trading liabilities                          
  In domestic offices                                                          3,947        250    6.33%
  In foreign offices                                                           2,522        174    6.90%
--------------------------------------------------------------------------------------------------------
Total trading liabilities                                                      6,469        424    6.55%
Securities sold under                        
  repurchase agreements                      
  In domestic offices                                                         21,748        675    3.10%
  In foreign offices                                                           2,024        190    9.39%
--------------------------------------------------------------------------------------------------------
Total securities sold under                  
 repurchase agreements                                                        23,772        865    3.64%
Other short-term borrowings                  
  In domestic offices                                                          8,506        330    3.88%
  In foreign offices                                                           4,211        276    6.55%
--------------------------------------------------------------------------------------------------------
Total other short-term borrowings                                             12,717        606    4.77%
Long-term debt                               
  In domestic offices                                                          4,425        185    4.18%
  In foreign offices                                                             432         29    6.71%
--------------------------------------------------------------------------------------------------------
Total long-term debt                                                           4,857        214    4.41%
--------------------------------------------------------------------------------------------------------
TOTAL INTEREST-BEARING                       
  LIABILITIES                                                                 69,676     $3,122    4.48%
                                                                                          ======
Noninterest-bearing deposits                 
  In domestic offices                                                          3,315
  In foreign offices                                                             539
--------------------------------------------------------------------------------------------------------
Total noninterest-bearing deposits                                             3,854
Noninterest-bearing trading liabilities                                        1,542
Acceptances outstanding                                                          387
All other liabilities                                                          5,725
Preferred stock of subsidiary                                                    236
Stockholders' Equity                         
  Preferred stock                                                                302
  Common stockholders' equity                                                  3,901
---------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND                        
  STOCKHOLDERS' EQUITY                                                        85,623
---------------------------------------------------------------------------------------------------------
% of liabilities attributable                
  to foreign offices                                                              38%
Rate spread                                                                                         1.40%
Net interest margin (net interest            
  revenue to total interest-                 
  earning assets)                            
 In domestic offices                                                          $46,227     $  862    1.86%
 In foreign offices                                                            30,571        534    1.75%
---------------------------------------------------------------------------------------------------------
Total                                                                         $76,798     $1,396    1.82%
---------------------------------------------------------------------------------------------------------
</TABLE>                                                           


                          BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 99
<PAGE>   69
--------------------------------------------------------------------------------

VOLUME/RATE ANALYSIS OF CHANGES IN NET INTEREST REVENUE

The following table attributes changes in fully taxable net interest revenue to
changes in either average daily balances or average rates for both
interest-earning assets and interest-bearing sources of funds. Because of the
numerous simultaneous balance and rate changes during any period, it is not
possible to precisely allocate such changes between balances and rates. For
purposes of this table, changes which are not due solely to balance or rate
changes are allocated to such categories based on the respective percentage
changes in average daily balances and average rates.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
                                                        1995/94                      1994/93
                                              --------------------------   --------------------------
                                              Increase (decrease) due to   Increase (decrease) due to
                                                       change in:                   change in:
                                              --------------------------   --------------------------
                                              Average   Average            Average   Average
(in millions)                                 Balance      Rate    Total   Balance      Rate    Total
------------------------------------------------------------------------   --------------------------
<S>                                           <C>       <C>       <C>      <C>       <C>        <C>
CONSOLIDATED
INTEREST REVENUE
Interest-bearing deposits with banks            $  94     $ (11)  $   83     $ (96)    $   6    $ (90)
Federal funds sold                                 64         9       73        (3)       12        9
Securities purchased under resale agreements      289       300      589       118       (31)      87
Securities borrowed                               206        92      298        27        57       84
Trading assets                                   (506)      231     (275)      (52)      570      518
Securities available for sale                     (27)        9      (18)      218       218      436
Investment securities                              --        --       --      (219)     (219)    (438)
Loans                                             (53)      117       64      (181)      170      (11)
-----------------------------------------------------------------------------------------------------
Total interest revenue                             67       747      814      (188)      783      595
-----------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest-bearing deposits                         187       209      396      (155)      106      (49)
Trading liabilities                                92       154      246       278       105      383
Securities sold under repurchase agreements       (12)      268      256       (75)      127       52
Other short-term borrowings                       (50)      189      139       231        57      288
Long-term debt                                    101        73      174        45        17       62
-----------------------------------------------------------------------------------------------------
Total interest expense                            318       893    1,211       324       412      736
-----------------------------------------------------------------------------------------------------
Net change in net interest revenue              $(251)    $(146)  $ (397)    $(512)    $ 371    $(141)
-----------------------------------------------------------------------------------------------------
DOMESTIC OFFICES
INTEREST REVENUE
Interest-bearing deposits with banks            $  17     $  15   $   32     $  (8)    $  13    $   5
Federal funds sold                                 64         9       73        (3)       12        9
Securities purchased under resale agreements      110       292      402        40         5       45
Securities borrowed                               206        92      298        27        57       84
Trading assets                                   (581)       40     (541)       (5)      502      497
Securities available for sale                     (12)       19        7       104       105      209
Investment securities                              --        --       --       (94)      (94)    (188)
Loans                                             (24)       46       22      (144)      120      (24)
-----------------------------------------------------------------------------------------------------
Total interest revenue                           (220)      513      293       (83)      720      637
-----------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest-bearing deposits                         (23)      131      108       (63)      113       50
Trading liabilities                               185       (49)     136        36       200      236
Securities sold under repurchase agreements      (136)      326      190       (57)      179      122
Other short-term borrowings                       (40)      165      125       187        65      252
Long-term debt                                      7        83       90        25        33       58
Funds provided to foreign offices                   7        22       29       227      (276)     (49)
Funds provided by foreign offices                 127       (26)     101       (95)      216      121
-----------------------------------------------------------------------------------------------------
Total interest expense                            127       652      779       260       530      790
-----------------------------------------------------------------------------------------------------
Net change in net interest revenue              $(347)    $(139)  $ (486)    $(343)    $ 190    $(153)
-----------------------------------------------------------------------------------------------------
FOREIGN OFFICES
INTEREST REVENUE
Interest-bearing deposits with banks            $  71     $ (20)  $   51     $ (79)    $ (16)   $ (95)
Securities purchased under resale agreements      172        15      187        97       (55)      42
Trading assets                                     18       248      266       (45)       66       21
Securities available for sale                     (15)      (10)     (25)      113       114      227
Investment securities                              --        --       --      (125)     (125)    (250)
Loans                                             (29)       71       42       (17)       30       13
-----------------------------------------------------------------------------------------------------
Total interest revenue                            217       304      521       (56)       14      (42)
-----------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest-bearing deposits                         227        61      288       (63)      (36)     (99)
Trading liabilities                               (48)      158      110       184       (37)     147
Securities sold under repurchase agreements       128       (62)      66       (19)      (51)     (70)
Other short-term borrowings                        (6)       20       14        19        17       36
Long-term debt                                     78         6       84        20       (16)       4
Funds provided by domestic offices                 (7)      (22)     (29)     (227)      276       49
Funds provided to domestic offices               (127)       26     (101)       95      (216)    (121)
-----------------------------------------------------------------------------------------------------
Total interest expense                            245       187      432         9       (63)     (54)
-----------------------------------------------------------------------------------------------------
Net change in net interest revenue              $ (28)    $ 117   $   89     $ (65)    $  77    $  12
-----------------------------------------------------------------------------------------------------
</TABLE>


100 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   70
--------------------------------------------------------------------------------

INTEREST RATE SENSITIVITY

Interest rate sensitivity data for the Corporation at December 31, 1995 is
presented in the table below. For purposes of this presentation, the
interest-earning/bearing components of trading assets and trading liabilities
are assumed to reprice within three months.

    The interest rate gaps reported in the table arise when assets are funded
with liabilities having different repricing intervals, after considering the
effect of off-balance sheet hedging instruments. Since these gaps are actively
managed and change daily as adjustments are made in interest rate views and
market outlook, positions at the end of any period may not be reflective of the
Corporation's interest rate view in subsequent periods. Active management
dictates that longer-term economic views are balanced against prospects of
short-term interest rate changes in all repricing intervals.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
                                                                           By Repricing Interval
                                                                   ------------------------------------------------------
                                                                            After three    After six       After
                                                                   Within        months       months    one year    After
                                                                    three    but within   but within  but within     five
(in millions) December 31, 1995                                    months    six months     one year  five years    years
-------------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>        <C>           <C>         <C>          <C>
ASSETS
Interest-bearing deposits with banks                             $  1,799       $   109       $  108      $    7   $   --
Federal funds sold                                                    854            --           --          --       --
Securities purchased under resale agreements                       17,774           184           --          --       --
Securities borrowed                                                 6,199            --           --          --       --
Trading assets                                                     31,992            --           --          --       --
Securities available for sale                                       2,338           601          216       1,457    1,671
Loans                                                               9,333         1,137          166         683    1,314
Noninterest-earning assets and allowance for credit losses             --            --           --          --       --
-------------------------------------------------------------------------------------------------------------------------
Total                                                              70,289         2,031          490       2,147    2,985
-------------------------------------------------------------------------------------------------------------------------
LIABILITIES, PREFERRED STOCK OF SUBSIDIARY AND
STOCKHOLDERS' EQUITY
Interest-bearing deposits                                          17,319         2,251        1,677         956      213
Trading liabilities                                                11,552            --           --          --       --
Securities sold under repurchase agreements                        14,759           488           --          --       --
Other short-term borrowings                                        14,019           880          414         194      254
Long-term debt                                                      1,908           845        1,270       3,237    2,034
Preferred stock of subsidiary                                         250            --           --          --       --
Preferred stock                                                        --            --           --         620      245
Noninterest-bearing liabilities and common stockholders' equity        --            --           --          --       --
-------------------------------------------------------------------------------------------------------------------------
Total                                                              59,807         4,464        3,361       5,007    2,746
-------------------------------------------------------------------------------------------------------------------------
Effect of off-balance sheet hedging instruments                   (13,420)        2,024        5,793       3,630    1,973
-------------------------------------------------------------------------------------------------------------------------
INTEREST RATE SENSITIVITY GAP                                    $ (2,938)      $  (409)      $2,922    $    770   $2,212
-------------------------------------------------------------------------------------------------------------------------
CUMULATIVE INTEREST RATE SENSITIVITY GAP                         $ (2,938)      $(3,347)      $ (425)    $   345   $2,557
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
                                                                                                         Non-
                                                                                                    interest-
                                                                                                      bearing
(in millions) December 31, 1995                                                                         funds       Total
-------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                <C>          <C>
ASSETS
Interest-bearing deposits with banks                                                                 $    --    $  2,023
Federal funds sold                                                                                        --         854
Securities purchased under resale agreements                                                              --      17,958
Securities borrowed                                                                                       --       6,199
Trading assets                                                                                        15,901      47,893
Securities available for sale                                                                             --       6,283
Loans                                                                                                     --      12,633
Noninterest-earning assets and allowance for credit losses                                            10,159      10,159
-------------------------------------------------------------------------------------------------------------------------
Total                                                                                                 26,060     104,002
-------------------------------------------------------------------------------------------------------------------------
LIABILITIES, PREFERRED STOCK OF SUBSIDIARY AND
STOCKHOLDERS' EQUITY
Interest-bearing deposits                                                                                 --      22,416
Trading liabilities                                                                                   14,539      26,091
Securities sold under repurchase agreements                                                               --      15,247
Other short-term borrowings                                                                               --      15,761
Long-term debt                                                                                            --       9,294
Preferred stock of subsidiary                                                                             --         250
Preferred stock                                                                                           --         865
Noninterest-bearing liabilities and common stockholders' equity                                       14,078      14,078
-------------------------------------------------------------------------------------------------------------------------
Total                                                                                                 28,617     104,002
-------------------------------------------------------------------------------------------------------------------------
Effect of off-balance sheet hedging instruments                                                           --          --
-------------------------------------------------------------------------------------------------------------------------
INTEREST RATE SENSITIVITY GAP                                                                        $(2,557)   $     --
-------------------------------------------------------------------------------------------------------------------------
CUMULATIVE INTEREST RATE SENSITIVITY GAP                                                             $    --    $     --
-------------------------------------------------------------------------------------------------------------------------
</TABLE>

DEPOSITS

The Corporation's certificates of deposit and other time deposits issued by
domestic and foreign offices in amounts of $100,000 or more, together with their
remaining maturities, and other interest-bearing deposits at December 31, 1995
were as follows:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
(in millions)                                       Domestic   Foreign     Total
--------------------------------------------------------------------------------
<S>                                                 <C>        <C>       <C>
Certificates of deposit of $100,000 or more
  3 months or less                                    $   58   $ 1,710   $ 1,768
  Over 3 through 6 months                                163       508       671
  Over 6 through 12 months                               527       317       844
  Over 12 months                                         261       160       421
--------------------------------------------------------------------------------
Total                                                  1,009     2,695     3,704
--------------------------------------------------------------------------------
Other time deposits of $100,000 or more
  3 months or less                                       132     9,892    10,024
  Over 3 through 6 months                                  9     1,486     1,495
  Over 6 through 12 months                                 1       777       778
  Over 12 months                                           1       135       136
--------------------------------------------------------------------------------
Total                                                    143    12,290    12,433
--------------------------------------------------------------------------------
Other                                                  4,250     2,029     6,279
--------------------------------------------------------------------------------
Total interest-bearing deposits                       $5,402   $17,014   $22,416
--------------------------------------------------------------------------------
</TABLE>

Deposits by foreign depositors in domestic offices amounted to $1.0 billion,
$1.0 billion and $1.1 billion at December 31, 1995, 1994 and 1993, respectively.


                         BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 101
<PAGE>   71
DESCRIPTION OF BUSINESS
================================================================================

BANKERS TRUST NEW YORK CORPORATION

Bankers Trust New York Corporation is a registered bank holding company which
was incorporated in 1965. The Parent Company, which accounted for 3 percent of
consolidated assets at December 31, 1995, supplies Bankers Trust Company, BT
Securities Corporation and its other subsidiaries with various advisory services
and coordinates their general policies and activities.

    The Parent Company is a legal entity separate and distinct from its
subsidiaries. The rights of the Parent Company to participate in any
distribution of assets of any subsidiary upon its liquidation or reorganization
or otherwise are subject to the prior claims of creditors of that subsidiary,
except to the extent that the Parent Company may itself be a creditor of that
subsidiary and its claims are recognized. Claims on the Parent Company's
subsidiaries by creditors other than the Parent Company include long-term debt
and substantial obligations with respect to deposit liabilities, trading
liabilities, commercial paper, securities sold under repurchase agreements and
federal funds purchased, as well as various other liabilities.

ORGANIZATIONAL UNITS

The Corporation concentrates its financial and managerial resources on selected
markets and services its clients by meeting their needs for financing, advisory,
processing and sophisticated risk management solutions. The Firm also conducts
its own proprietary operations. At the beginning of 1996 the Corporation
realigned its personnel into the following organizational units.

    Investment Banking delivers the Firm's full range of financing, advisory and
research products and services to its corporate, financial institution and
investor clients in the United States, Canada and Europe. These include the
underwriting, distribution and trading of public equity and debt (both
investment grade and high-yield), private placements and structured finance, as
well as merger and acquisition advisory services. The unit is also responsible
for the Firm's private equity investments.

    Risk Management Products and Services is comprised of businesses that assist
clients in the management of risk. Products and services include interest rate,
currency, equity, commodity and credit derivatives, as well as risk management
advisory. This business is also responsible for managing the Corporation's risk
from client derivatives transactions.

    Trading and Positioning provides market-related products and services to the
Corporation's clients and enters into securities, currency, commodity,
derivatives and funding transactions on a proprietary basis. The unit is
responsible for funding of the Corporation worldwide; capital and liquidity
management; and the management of the Corporation's securities available for
sale portfolio.

    Investment Management is responsible for the Firm's investment management
business for pension funds, corporations and other institutional investors
worldwide.* The services they provide include both the active and passive
management of equities, fixed income securities and other financial instruments
in many of the world's major financial markets.

    Client Transaction Processing is engaged in the gathering, moving and
managing of assets for institutional clients throughout the world. It delivers
many of the Corporation's processing, fiduciary and trust services, such as cash
management, custody and clearance and deposit and credit services, to
corporations, financial institutions and governments and their agencies around
the world. It also provides to sponsors of U.S. defined benefit and defined
contribution plans the Corporation's full range of services, including
recordkeeping and administrative services and portfolio measurement.

    Geographically-Based Businesses provides many of the products and services
referred to above, principally to clients in Asia, Australia/New Zealand and
Latin America. Prominent among these are financial advisory services to
governments and both state-owned and privatized businesses. This group also
sells, trades and distributes restructured loans, bonds, equities and other
instruments of Latin American and other emerging markets issuers.

    Private Bank/Asset-Based Lending/Portfolio is a group of diverse businesses.
The Private Bank provides asset management, banking and fiduciary services to
high net worth individuals. Asset-Based Lending provides collateralized credit
to medium-sized companies in the U.S. Portfolio manages a portion of the Firm's
loans to clients.

*Australian funds management financials are reported in the results of Bankers
 Trust Australia Limited.

Insurance Activities

The Corporation has two majority-owned Chilean subsidiaries, known as Consorcio
and Compensa. Consorcio underwrites pension-related life and disability
insurance, and both companies sell pension-related life annuities.

BUSINESS FUNCTIONS

Because of the close interrelationship among its organizational units, the
Corporation breaks down and analyzes its business on the basis of five business
functions, which represent the Firm's core business activities. A business
function is often common to two or more of the organizational units described
above. Descriptions of each of the Firm's five business functions appear on page
33.

BANKERS TRUST COMPANY

The Parent Company's principal banking subsidiary is Bankers Trust Company,
which, along with its subsidiaries ("BTCo"), accounted for 70 percent of the
Corporation's consolidated assets at December 31, 1995. BTCo, founded in 1903,
is among the largest commercial banks in New York City and the United States,
based on total assets. BTCo originates loans and other forms of credit, accepts
deposits, arranges financings and provides numerous other commercial banking and
financial services. BTCo provides a broad range of financial advisory services
to its clients.


102 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   72
--------------------------------------------------------------------------------

It also engages in the trading of currencies, securities, derivatives and
commodities.

BT SECURITIES CORPORATION

BT Securities Corporation ("BT Securities"), a wholly-owned subsidiary of the
Parent Company, accounted for 21 percent of the Corporation's consolidated
assets at December 31, 1995. BT Securities is a primary dealer in U.S.
Government securities. It also structures, underwrites and deals in money market
instruments, commercial paper, and municipal, asset-backed and corporate debt
and equity securities. BT Securities also provides advisory and private
placement services and structures a broad range of derivative transactions for
clients. In addition, BT Securities acts as agent for BTCo in the origination
and sale of loans.

BANKERS TRUST (DELAWARE)

Bankers Trust (Delaware) is a state bank chartered under the laws of Delaware,
which, along with its subsidiaries, accounted for 1 percent of the Corporation's
consolidated assets at December 31, 1995. Bankers Trust (Delaware) engages in
commercial banking activities, with an emphasis on lending, funding and
corporate finance. BT Commercial Corporation, its wholly-owned subsidiary, is a
commercial finance company.

SUPERVISION AND REGULATION

BT Securities entered into a settlement agreement with the Securities and
Exchange Commission (the "SEC") and the Commodity Futures Trading Commission
(the "CFTC") concerning all investigations of the Corporation and its
subsidiaries by those agencies with respect to the conduct of its business in
privately negotiated over-the-counter derivatives (the "Derivatives"). As part
of that settlement entered into on December 22, 1994, the SEC and the CFTC
agreed not to pursue further Bankers Trust related entities concerning
Derivatives matters prior to the settlement date (although they did reserve the
right to pursue individuals), and BT Securities paid $10 million in civil
penalties and agreed to and has retained independent consultants to examine its
conduct of the Derivatives business. The Corporation also has agreed to
implement such consultants' recommendations.

    The Corporation, BTCo and BT Securities have also entered into a Written
Agreement with the Federal Reserve Bank of New York and a Memorandum of
Understanding with the New York State Banking Department concerning the
Corporation's leveraged derivative transaction business, each of which call for
an independent counsel review and the establishment of a Compliance Committee of
the Board of Directors of the Corporation to monitor compliance with the Written
Agreement and the Memorandum of Understanding.

    The Corporation cannot predict the effect on the derivative business in
general, or the Corporation's derivative business in particular, of these events
or of the current legislative, regulatory and media attention being given to the
derivatives industry.

    Details with respect to the foregoing are set forth in the Corporation's
Current Reports on Form 8-K dated December 4, 1994, December 22, 1994 and
January 19, 1995 which have been filed with the SEC.

    The Parent Company is a bank holding company within the meaning of the Bank
Holding Company Act of 1956, and as such is required to register with the
Federal Reserve Board. As a registered bank holding company, the Parent Company
is required to file with the Federal Reserve Board certain reports and
information and is restricted in its acquisitions, certain of which are subject
to approval by the Federal Reserve Board. In addition, the Parent Company would
be required to obtain the approval of the New York State Banking Department in
order for it to acquire certain bank and nonbank subsidiaries.

    The Parent Company and its nonbank subsidiaries are affiliates of BTCo and
Bankers Trust (Delaware) within the meaning of applicable federal statutes, and
such banks are therefore subject to restrictions on loans and other extensions
of credit to the Parent Company and certain other affiliates and on certain
other types of transactions with them or involving their securities.

    BTCo is subject to the supervision of, and to examination by, the New York
State Banking Department, the Federal Reserve Board and the Federal Deposit
Insurance Corporation. Bankers Trust (Delaware) is subject to regulation by the
Office of the State Bank Commissioner of the State of Delaware and by the
Federal Deposit Insurance Corporation. See Note 14 of Notes to Financial
Statements for the required reserve balances maintained by the Corporation's
subsidiary banks at a Federal Reserve Bank and limitations on the availability
of BTCo's undistributed earnings for the payment of dividends.

    BT Securities is registered as a broker-dealer in all 50 states, the
District of Columbia and Puerto Rico and with the Securities and Exchange
Commission, and is a member of the National Association of Securities Dealers,
Inc. and is therefore subject to supervision by those regulators. As a bank
securities affiliate, BT Securities is subject to the supervision of the Federal
Reserve Board, which has imposed limitations on the gross revenue from certain
activities of such affiliates and certain other conditions governing their
operations.

    The Financial Institutions Reform, Recovery and Enforcement Act of 1989
("FIRREA") provides for cross-guarantees of the liabilities of insured
depository institutions pursuant to which any bank or savings association
subsidiary of a holding company may be required to reimburse the FDIC for any
loss or anticipated loss to the FDIC that arises from a default of any of such
holding company's other subsidiary banks or savings associations or assistance
provided to such an institution in danger of default.

    In December 1991, the Federal Deposit Insurance Corporation Improvement Act
of 1991 ("FDICIA") was enacted. FDICIA substantially revised the bank regulatory
and funding provisions of the Federal Deposit Insurance Act and revised several
other federal banking statutes.

    FDICIA establishes five capital tiers, ranging from "well capitalized," to
"critically undercapitalized." A depository institution is well capitalized if
it significantly exceeds the minimum level required by regulation for each
relevant capital measure. Under


                         BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 103
<PAGE>   73
--------------------------------------------------------------------------------

FDICIA, an institution that is not well capitalized is generally prohibited from
accepting brokered deposits and offering interest rates on deposits higher than
the prevailing rate in its market; in addition, "pass through" insurance
coverage may not be available for certain employee benefit accounts. FDICIA also
requires an undercapitalized depository institution to submit an acceptable
capital restoration plan to the appropriate federal bank regulatory agency. One
requisite element of such a plan is that the institution's parent holding
company must guarantee compliance by the institution with the plan, subject to
certain limitations. In the event of the parent holding company's bankruptcy,
the guarantee, and any other commitments that the parent holding company has
made to federal bank regulators to maintain the capital of its depository
institution subsidiaries, would be assumed by the bankruptcy trustee and
entitled to priority in payment.

    Based on their respective regulatory capital ratios at December 31, 1995,
both BTCo and Bankers Trust (Delaware) are well capitalized, based on the
definitions in the regulations issued by the Federal Reserve Board and the other
federal bank regulatory agencies setting forth the general capital requirements
mandated by FDICIA. See "Capital Resources" on page 42 for information regarding
the Corporation's and BTCo's regulatory capital ratios.

    FDICIA contains numerous other provisions, including new reporting
requirements, termination of the "too big to fail" doctrine except for special
cases, limitations on the FDIC's payment of deposits at foreign branches and
revised regulatory standards for, among other things, real estate lending and
capital adequacy.

    A federal depositor preference statute was enacted in 1993 providing that
deposits and certain claims for administrative expenses and employee
compensation against an insured depository institution would be afforded a
priority over other general claims against such an institution, including
federal funds and letters of credit, in the "liquidation or other resolution" of
such an institution by any receiver.

    In addition to banking and securities laws, regulations and regulatory
agencies governing the Corporation worldwide, the Corporation also is subject to
various other laws, regulations and regulatory agencies throughout the United
States and in other countries. Furthermore, various proposals, bills and
regulations have been and are being considered in the United States Congress,
the New York State Legislature and various other governmental regulatory and
legislative bodies, which could result in changes in the profitability and
governance of the Corporation. It cannot be predicted whether new legislation or
regulations will be adopted and, if so, how they would affect the Corporation.

    References under the caption "Supervision and Regulation" to applicable
statutes, regulations and orders are brief summaries of portions thereof which
do not purport to be complete and which are qualified in their entirety by
reference thereto.

FORWARD LOOKING STATEMENT AND COMPETITION

The Corporation is continuing to refine its different business lines, and as 
part of that exercise, management of these business lines, working with senior
management of the Corporation, has developed a business plan which has as one of
its goals the return of the Corporation's net income for 1996 to a level that
is more comparable with net income seen in 1994 rather than the lower
level of net income seen in 1995. Actual results could differ materially for
the reasons set forth in "Important Factors Relating to Forward Looking
Statements" hereinafter set forth, and the goals set by management might not
be met. The establishment of rational goals for each business organization of
the Firm and accountability during the year by each such organization for
performance measured against those goals are an essential element of the
Corporation's strategy.

    The banking and securities businesses are intensely competitive and the
Corporation competes for business with other financial services organizations,
including major commercial and investment banks and finance and investment
advisory companies, located in principal cities throughout the world.

IMPORTANT FACTORS RELATING TO FORWARD LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements to encourage companies to provide prospective
information about their companies without fear of litigation so long as those
statements are identified as forward-looking and are accompanied by meaningful
cautionary statements identifying important factors that could cause actual
results to differ materially from those projected in such statements. In
connection with certain statements made in this report and those that may be
made in the future by or on behalf of the Corporation which are identified as
forward-looking statements, the Corporation notes that the following important
factors, among others, could cause actual results to differ materially from
those set forth in any such forward-looking statements. Further, such
forward-looking statements speak only as of the date on which such statement or
statements are made, and the Corporation undertakes no obligation to update any
forward-looking statement or statements to reflect events or circumstances after
the date on which such statement is made or to reflect the occurrence of
unanticipated events.

    The business and profitability of a large financial services organization
such as the Corporation is influenced by prevailing economic conditions and
governmental policies, both foreign and domestic. The actions and policy
directives of the Federal Reserve Board determine to a significant degree the
cost and the availability of funds obtained from money market sources for
lending and investing. Federal Reserve Board policies and regulations also
influence, directly and indirectly, the rates of interest paid by commercial

104 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   74
--------------------------------------------------------------------------------

banks on their interest-bearing deposits and may also impact the value of
financial instruments held by the Corporation. The nature and impact on the
Corporation of future changes in economic and market conditions and monetary
and fiscal policies, both foreign and domestic, are not predictable and are
beyond the Corporation's control. In addition, these conditions and policies
can impact the Corporation's customers and counterparties which may increase
the risk of default on their obligations to the Corporation and its affiliates.
They can also affect the competitive conditions in the markets and products
within which the Corporation operates, which can have an adverse impact of the
Corporation's ability to maintain its revenue streams.

    As part of its ongoing business, the Corporation assumes financial
exposures to interest rates, currencies, equities and other financial products.
In doing so, the Corporation is subject to unforeseen events which may not have
been anticipated or which may have effects which exceed those assumed within
its risk management processes. This risk can be accentuated by volatility and
reduction in liquidity in those markets which in turn can impact the
Corporation's ability to hedge and trade the positions concerned. In addition,
the Corporation is dependent on its ability to access the financial markets for
its funding needs.

    The Corporation's international operations, which are widely diversified
geographically and vary from country to country, involve certain economic,
political and legal risks which differ from those associated with its domestic
operations. These risks include, among others, the possibility of expropriation
of assets, exchange rate fluctuations, severe reductions in business levels,
restrictions on the withdrawal of funds, balance-of-payments problems and
changes in laws and regulations. In addition, in certain jurisdictions the
Corporation's operations may involve legal uncertainties. Further, certain
domestic, as well as foreign, financial institutions with which the
Corporation competes may not be subject to the same regulatory restrictions as
the Corporation which may make it more difficult for the Corporation to
compete with those institutions for business. 

    As noted in "Supervision and Regulation" on page 103, the Corporation is
regulated by and subject to various domestic and international regulators. The
actions of these regulators can have an impact on the profitability and
governance of the Corporation. Increases by regulatory authorities of minimum
capital, reserve, deposit insurance and other financial viability requirements
can also affect the Corporation's profitability.

    The Corporation is subject to operational and control risk which is the
potential for loss caused by a breakdown in communication, information,
processing and settlement systems or processes or a lack of compliance with the
procedures on which they rely either within the Corporation or within the
broader financial systems infrastructure.

    As with any large financial institution, the Corporation is also subject to
the risk of litigation and to an unexpected or adverse outcome in such
litigation. Competitive pressures in the marketplace and unfavorable or adverse
publicity and news coverage can have the effect of lessening customer demand
for the Corporation's services. Ultimately, the Corporation's businesses and
their success are dependent on the Corporation's ability to attract and retain
high quality employees.

PROPERTIES

BTCo owns a 42-story office building located at 280 Park Avenue, a 10-story
office building at 4 Albany Street and a 39-story building known as One Bankers
Trust Plaza, all in Manhattan, and a 998-year leasehold interest in an
eight-story office building in the Broadgate complex in London, England. The
other principal office premises leased are seven stories of a 37-story building
at 14-16 Wall Street in Manhattan, an eight-story building in Jersey City, New
Jersey and a three-story building in Nashville, Tennessee and a significant
portion of a 42-story office building in Sydney, Australia. Portions of certain
of these properties are leased to tenants or subtenants. In addition to the
offices referred to above, branch offices and locations for other activities are
occupied in cities throughout the world under various types of ownership and
leaseholds. See Note 7 of Notes to Financial Statements for additional
information concerning lease commitments.

LEGAL PROCEEDINGS

In the fourth quarter of 1994, Procter & Gamble brought a lawsuit against BTCo.
In the first quarter of 1995 the suit was amended to include BT Securities
Corporation, and in the third quarter of 1995, the suit was further amended to
add claims under Title IX of the Organized Crime Control Act of 1970. The suit
seeks to void and rescind two interest rate swap transactions entered into with
BTCo and claims $195.5 million in compensatory damages and unspecified punitive
damages. Management believes that the expected potential financial impact should
be covered by existing reserves. Various other actions and proceedings involving
the Parent Company and various of its subsidiaries are currently pending.
Management, after discussions with counsel, does not anticipate that losses, if
any, resulting from such other actions and proceedings would be material.

                         BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES 105
<PAGE>   75
--------------------------------------------------------------------------------
EXECUTIVE OFFICERS OF THE REGISTRANT

   Set forth below are the names and ages of the executive officers of the
   Parent Company, positions held and the year from which held.

   These officers are elected annually by the Board of Directors. There are no
   family relationships among such persons.
   -----------------------------------------------------------------------------
*Charles S. Sanford, Jr., 59(1)
   Chairman of the Board
   Chairman of the Board of the Parent Company and of BTCo since 1996; Chairman
   of the Board and Chief Executive Officer since 1987, and Director since 1982;
   Deputy Chairman 1986-1987; President of the Parent Company and of BTCo
   1983-1986; Executive Vice President in charge of the Resources Management
   Department of BTCo 1974-1983.

*Frank N. Newman, 53
   President and Chief Executive Officer
   Mr. Newman joined the Parent Company and BTCo as Senior Vice Chairman and a
   Director on September 21, 1995. On October 19, 1995 he was elected President,
   and to the additional office of Chief Executive Officer effective January 1,
   1996. Mr. Newman, former Deputy Secretary of the United States Treasury,
   joined the Treasury in 1993 after six years with BankAmerica Corporation
   where he was the chief financial officer and vice chairman of the board.

 Mark Bieler, 50
   Executive Vice President
   Executive Vice President of the Parent Company since 1987 and Managing
   Director of BTCo since 1992; Executive Vice President of BTCo 1987-1992;
   Senior Vice President and head of the Human Resources Department in 1985. Mr.
   Bieler is in charge of the Human Resources Department.

*Richard H. Daniel, 49
   Executive Vice President,
   Chief Financial Officer and Controller
   Effective on February 5, 1996, Mr. Daniel joined the Parent Company as
   Executive Vice President, Chief Financial Officer (Principal Financial
   Officer) and Controller, and BTCo as Managing Director, Chief Financial
   Officer (Principal Financial Officer) and Controller. He formerly held the
   positions of chief financial officer of Federal Home Loan Mortgage
   Corporation from 1994 to 1996, and executive vice president and director of
   financial analysis and planning at BankAmerica Corporation from 1987 to 1994.

 Joseph A. Manganello, Jr., 60
   Executive Vice President and
   Chief Credit Officer
   Executive Vice President and Chief Credit Officer of the Parent Company since
   1988; Managing Director of BTCo since 1992 and Chief Credit Officer since
   1984; Executive Vice President of BTCo 1982-1992; Department Head of the
   United States Department of BTCo prior to 1984. He is in charge of the Credit
   Policy Department.

*George J. Vojta, 60
   Vice Chairman
   Vice Chairman and Director of the Parent Company and BTCo since January 1992;
   Executive Vice President 1984-1992. He is a member of various operating
   committees that oversee the Private Bank, Asset-Based Lending and Portfolio.

 Melvin A. Yellin, 53
   Executive Vice President and
   General Counsel
   Executive Vice President and General Counsel of the Parent Company and
   Managing Director and General Counsel of BTCo effective January 1, 1996;
   Senior Vice President (Chief Legal Officer) of the Parent Company and
   Managing Director (Chief Legal Officer) of BTCo effective September 28, 1995;
   Managing Director and Deputy General Counsel of BTCo 1992-1995. Vice
   President and Counsel 1981-1992. He is in charge of the Legal Department.

 *  Management Committee                                                        

(1) Mr. Sanford announced his intention to retire as Chairman and Director
    effective April 16, 1996.

106 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES

<PAGE>   76
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549

                                   FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934
    For the fiscal year ended December 31, 1995 or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934
    Commission file number 1-5920

                       BANKERS TRUST NEW YORK CORPORATION
             (Exact name of registrant as specified in its charter)

           NEW YORK                                           13-6180473
(State or other jurisdiction of                           (I.R.S. employer
incorporation or organization)                           identification no.)

   280 PARK AVENUE
     NEW YORK, NY                                              10017
 (Address of principal                                       (Zip code)
   executive offices)

                                 (212) 250-2500
              (Registrant's telephone number, including area code)
          Securities Registered Pursuant to Section 12(b) of the Act:

<TABLE>
<CAPTION>
                                                                                             Name of each
                                                                                             exchange on
                Title of each class                                                       which registered
-------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>
Common Stock, $1 par value                                                            New York Stock Exchange
Preferred Share Purchase Rights                                                       New York Stock Exchange
8.55% Cumulative Preferred Stock, Series I ($250 Liquidation Preference)              New York Stock Exchange
Depositary Shares representing a one-fourth interest in a share of 8.55%
  Cumulative Preferred Stock, Series I ($100 Liquidation Preference)                  New York Stock Exchange
7 5/8% Cumulative Preferred Stock, Series O                                           American Stock Exchange
Depositary Shares representing a one-tenth interest in a share of 7 5/8%
  Cumulative Preferred Stock, Series O ($250 Liquidation Preference)                  American Stock Exchange
7.50% Cumulative Preferred Stock, Series P                                            American Stock Exchange
Depositary Shares representing a one-fortieth interest in a share of 7.50%
  Cumulative Preferred Stock, Series P ($1,000 Liquidation Preference)                American Stock Exchange
Adjustable Rate Cumulative Preferred Stock, Series Q                                  New York Stock Exchange
Depositary Shares representing a one-hundredth interest in a share of Adjustable
  Rate Cumulative Preferred Stock, Series Q ($2,500 Liquidation Preference)           New York Stock Exchange
Adjustable Rate Cumulative Preferred Stock, Series R                                  New York Stock Exchange
Depositary Shares representing a one-hundredth interest in a share of Adjustable
  Rate Cumulative Preferred Stock, Series R ($2,500 Liquidation Preference)           New York Stock Exchange
7 3/4% Cumulative Preferred Stock, Series S ($2,500 Liquidation Preference)           New York Stock Exchange
Depository Shares representing a one-hundredth interest in a share of 7 3/4%
  Cumulative Preferred Stock, Series S ($2,500 Liquidation Preference)                New York Stock Exchange
</TABLE>

        Securities Registered Pursuant to Section 12(g) of the Act: None

    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                                    Yes  X   No
                                                        ---     ---
    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.                                     [   ]

    State the aggregate market value of the voting stock held by non-affiliates
of the registrant as of January 31, 1996: Common Stock, $1 par value,
$5,105,271,563.

    Indicate the number of shares outstanding of each of the registrant's
classes of common stock as of January 31, 1996: Common Stock, $1 par value,
79,241,268 shares.

                      DOCUMENTS INCORPORATED BY REFERENCE

    Portions of the Proxy Statement for the 1996 Annual Meeting of Stockholders
are incorporated by reference into Part III.

BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES                       107

<PAGE>   77
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
FORM 10-K CROSS-REFERENCE INDEX
<S>                                                        <C>
Part I
Item No.                                                                                Pages
  1.  Business
      Description of Business                                                             102
      Supplemental Financial Data
          International Operations                                                         82
          Distribution of Assets, Liabilities and
             Stockholders' Equity; Interest Rates and
             Interest Differential                                                         98
         Investment Portfolio                                                              69
         Loan Portfolio                                    54, 55, 56, 57, 58, 59, 66, 67, 70
         Summary of Credit Loss Experience                                             51, 70
         Deposits                                                                     99, 101
         Return on Equity and Assets                                                       32
         Short-Term Borrowings                                                             71
  2.  Properties                                                                          105
  3.  Legal Proceedings                                                                   105
  4.  Submission of Matters to a Vote of Security Holders                                   *
  -   Executive Officers of the Registrant                                                106

Part II
  5.  Market for Registrant's Common Equity and
         Related Stockholder Matters                                                   77, 97
  6.  Selected Financial Data                                                              32
  7.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                                               33
  8.  Financial Statements and Supplementary Data
      Bankers Trust New York Corporation and
        Subsidiaries (Consolidated)                                                     62-65
      Notes to Financial Statements                                                        66
      Report of Independent Auditors                                                       96
      Selected Quarterly Financial Data                                                    97
  9.  Changes in and Disagreements with Accountants
        on Accounting and Financial Disclosure                                              *

Part III
The information required by Items 10 through 13 in this part is omitted pursuant
to Instruction G of Form 10-K since the Corporation intends to file with the
Commission a definitive Proxy Statement, pursuant to Regulation 14A, not later
than 120 days after December 31, 1995.

Part IV
 14. Exhibits, Financial Statement Schedules and
        Reports on Form 8-K
           (a) (1) Financial Statements-See Item 8.
               (2) Financial Statement Schedules
                   All schedules normally required by Form 10-K are omitted
                   since they are either not applicable or the required
                   information is shown in the financial statements or the notes
                   thereto.

               (3) Exhibits
                          3. Articles of Incorporation and By-laws,
                              as amended                                                   **
                          4. Instruments Defining the Rights of
                              Security Holders, Including Indentures
                            (ii) Long-Term Debt Indentures                                ***
                         10. Material Contracts
                            (ii) (D)  Leases for Principal Premises
                                      described on page 104                                **
                            (iii) (A) Management Contracts and 
                                      Compensation Plans                                   **
                         12. Statements Re Computation of Ratios                           **
                         21. Subsidiaries of the Registrant                                **
                         23. Consent of Experts                                            **
                         24. Power of Attorney                                             **
                         27. Financial Data Schedule
                         99. Additional Exhibits
                            (i) Preferred Share Purchase Rights                            **
                           (ii) Written Agreement dated December 4, 1994 among Bankers
                                Trust New York Corporation, Bankers Trust Company, BT
                                Securities Corporation and the Federal Reserve Bank of 
                                New York.                                                  **

                          (iii) BT Securities offers of settlement to the Securities and
                                Exchange Commission (the "SEC") and the Commodity Futures
                                Trading Commission (the "CFTC"), the SEC's Order 
                                Instituting Proceedings and its Findings and Order and 
                                the CFTC's Complaint and its Opinion and Order.             **

           (b) Reports on Form 8-K-The Corporation filed three reports on Form 8-K during
               the quarter ended December 31, 1995.

               --    The report dated October 19, 1995 filed the Corporation's Press
                     Release dated October 19, 1995, which announced earnings for the
                     quarter ended September 30, 1995, and announced that Frank N. Newman
                     had been elected president of Bankers Trust New York Corporation.

               --    The report dated November 6, 1995 filed an underwriting agreement
                     covering the issuance and sale by Bankers Trust New York Corporation
                     of 7 1/8% Subordinated Notes due 2010 and various other exhibits
                     related to the issuance.

               --    The reported dated November 10, 1995 filed the By-laws, as amended, of
                     Bankers Trust New York Corporation, and filed an underwriting
                     agreement covering the issuance and sale by Bankers Trust New York
                     Corporation of 7 1/2% Subordinated Notes due 2015 and various other
                     exhibits related to the issuance.
</TABLE>
--------------------------------------------------------------------------------
  *  Not applicable.

 **  A copy of any exhibit not contained herein may be obtained by writing to
     James T. Byrne, Jr., Office of the Secretary, Bankers Trust New York
     Corporation, One Bankers Trust Plaza, 130 Liberty Street, Mail Stop 2310,
     New York, NY 10006.

***  The Corporation hereby agrees to furnish to the Commission, upon request, a
     copy of any instruments defining the rights of holders of long-term debt
     issued by the Parent Company or its subsidiaries.

This report on Form 10-K has not been approved or disapproved by the Securities
and Exchange Commission nor has the Commission passed upon the accuracy or
adequacy of this report. Portions of the 1995 Annual Report to the Corporation's
stockholders are not required by the Form 10-K report and are not "filed" as
part of the Form 10-K. Only those sections of the Annual Report referenced in
the above index are incorporated in the Form 10-K.


108                        BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES

<PAGE>   78
--------------------------------------------------------------------------------
FORM 10-K SIGNATURES

  Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
  Act of 1934, the registrant has duly caused this report to be signed on its
  behalf by the undersigned, thereunto duly authorized, on March 7, 1996.

                   Bankers Trust New York Corporation

                   By /s/ JAMES T. BYRNE, JR.
                      ----------------------------------------------------------
                      (James T. Byrne, Jr., Senior Vice President and Secretary)

--------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on March 7, 1996.

CHARLES S. SANFORD, JR.*               Chairman of the Board
-------------------------              and Director
(Charles S. Sanford, Jr.)

FRANK N. NEWMAN*                       President, Chief
-------------------------              Executive Officer and
(Frank N. Newman)                      Director (Principal
                                       Executive Officer)

RICHARD H. DANIEL*                     Executive Vice President,
-------------------------              Chief Financial Officer
(Richard H. Daniel)                    and Controller
                                       (Principal Financial
                                       Officer)

GEOFFREY M. FLETCHER*                  Senior Vice President
-------------------------              (Principal Accounting
(Geoffrey M. Fletcher)                 Officer)


GEORGE B. BEITZEL*                     Director
-------------------------
(George B. Beitzel)

PHILLIP A. GRIFFITHS*                  Director
-------------------------
(Phillip A. Griffiths)

WILLIAM R. HOWELL*                     Director
-------------------------
(William R. Howell)

JON M. HUNTSMAN*                       Director
-------------------------
(Jon M. Huntsman)

VERNON E. JORDAN, JR.*                 Director
-------------------------
(Vernon E. Jordan, Jr.)

HAMISH MAXWELL*                        Director
-------------------------
(Hamish Maxwell)

DONALD F. McCULLOUGH*                  Director
-------------------------
(Donald F. McCullough)

N. J. NICHOLAS JR.*                    Director
-------------------------
(N. J. Nicholas Jr.)

RUSSELL E. PALMER*                     Director
-------------------------
(Russell E. Palmer)

PATRICIA CARRY STEWART*                Director
-------------------------
(Patricia Carry Stewart)

GEORGE J. VOJTA*                       Vice Chairman
-------------------------              and Director
(George J. Vojta)







*By /s/ JAMES T. BYRNE, JR.
    ---------------------------------------
    (James T. Byrne, Jr., Attorney-in-Fact)


BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES                    109

<PAGE>   79
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    EXHIBITS

                                       TO

                                    FORM 10-K

                                   Filed Under

                       THE SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995

                       BANKERS TRUST NEW YORK CORPORATION

110 BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES
<PAGE>   80
                       BANKERS TRUST NEW YORK CORPORATION
                           EXHIBIT INDEX TO FORM 10-K

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995


<TABLE>
<S>                                                                                                                            <C>
  3. Articles of Incorporation and By-laws, as amended
       Restated Certificate of Incorporation of the Registrant filed with the State of New York on June 9, 1988                 (1) 
       Certificate of Amendment of the Restated Certificate of Incorporation of the Registrant filed with the
            State of New York on August 30, 1989                                                                                (1)
       Certificate of Amendment of the Restated Certificate of Incorporation  of the Registrant filed with the
            State of New York on June 14, 1990                                                                                  (1)
       Certificate of Amendment of the Restated Certificate of Incorporation of the Registrant filed with the
            State of New York on March 20, 1992                                                                                 (1)
       Certificate of Amendment of the Restated Certificate of Incorporation  of the Registrant filed with the
            State of New York on October 27, 1992                                                                               (1)
       Certificate of Amendment of the Restated Certificate of Incorporation of the Registrant filed with the
            State of New York on January 21, 1993                                                                               (1)
       Certificate of Amendment of the Restated Certificate of Incorporation of the Registrant filed with the
            State of New York on June 1, 1993                                                                                   (1)
       Certificate of Amendment of the Restated Certificate of Incorporation of the Registrant filed with the
            State of New York on August 18, 1993                                                                                (2)
       Certificate of Amendment of the Restated Certificate of Incorporation of the Registrant filed with the
            State of New York on March 25, 1994                                                                                 (3)
       Certificate of Amendment of the Restated Certificate of Incorporation of the Registrant filed with the
            State of New York on August 22, 1994                                                                                (4)
       Certificate of Amendment of the Restated Certificate of Incorporation of the Registrant filed with the
            State of New York on June 29, 1995                                                                                  (5)
       By-laws as in effect October 19, 1995                                                                                    (6)

   4. Instruments Defining the Rights of Security Holders, Including Indentures
       (ii) Long-Term Debt Indentures                                                                                          108

  10. Material Contracts
       (ii) (D) Leases for Principal Premises Described on Page 105
                  Lease Agreement relating to the seven stories of a 37-story building located at 14-16 Wall Street             (7)
                  Lease Agreement relating to the eight-story building located in Jersey City, New Jersey                       (8)
                  Lease Agreement relating to the eight-story building located in London, England                               (9)
                  Lease Agreement relating to the three-story building in Nashville, Tennessee                                 (10)
                  Synopsis of the Agreement for Sub-Lease and the Sub-Lease relating to the 42-story building located
                       in Sydney, Australia                                                                                    (11)
      (iii) (A) Management Contracts and Compensation Plans
                  (1) Employment Contract for Frank N. Newman                                                                  113
                  (2) Severance Agreement with Eugene B. Shanks                                                                117
                  1994 Stock Option and Stock Award Plan                                                                       (12)
                  1991 Stock Option and Stock Award Plan                                                                       (13)
                  1985 Stock Option and Stock Award Plan                                                                       (14)
                       January, 1989 amendments thereto                                                                        (11)
                  Additional Capital Accumulation Plan                                                                         (15)
                  The Supplemental Executive Retirement Plan                                                                    (9)
                  Deferred Compensation Plan for Directors                                                                      (6)
                       January, 1989 amendments to the Deferred Compensation Plan for Directors and The Supplemental
                       Executive Retirement Plan                                                                               (12)

  12. Statements Re Computation of Ratios
      Computation of Consolidated Ratios of Earnings to Fixed Charges                                                          135
      Computation of Consolidated Ratios of Earnings to Combined Fixed Charges and Preferred Stock
           Dividends Requirements                                                                                              136
  21. Subsidiaries of the Registrant                                                                                           137
  23. Consent of Experts                                                                                                       138
  24. Power of Attorney                                                                                                        139
  27. Financial Data Schedule                                                                                                  141
  99. Additional Exhibits
        (i) Rights Agreement dated as of February 22, 1988 describing the terms of the Preferred Share Purchase Rights          (9)
       (ii) Written Agreement dated December 4, 1994, among Bankers Trust New York Corporation, Bankers Trust Company,
            BT Securities Corporation and the Federal Reserve Bank of New York                                                 (17)
      (iii) (1) Offer of Settlement of BT Securities Corporation before the Securities and Exchange Commission, dated
                December 21, 1994                                                                                              (16)
            (2) Offer of Settlement of Respondent BT Securities Corporation before the Commodity Futures Trading
                Commission, dated December 21, 1994                                                                            (16)
            (3) Order Instituting Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Sections 15(b) and
                21c of the Securities Act of 1934, and Findings and Order Imposing Remedial Sanctions. In re BT Securities
                Corporation, Securities Act of 1933 Release No. 7124 (Dec. 22, 1994)                                           (16)
            (4) Complaint Pursuant to Sections 6(c) and 6(d) of the Commodity Exchange Act and Opinion and Order Accepting
                Offer of Settlement, Making Findings and Imposing Remedial Sanctions, in re BT Securities Corporation,
                CFTC Docket No. 95-2 (Dec. 22, 1994)                                                                           (16)
</TABLE>

       (NOTE: FOOTNOTE REFERENCES FOR THIS INDEX APPEAR ON THE NEXT PAGE.)

                        BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES  111
<PAGE>   81
                       BANKERS TRUST NEW YORK CORPORATION
     EXHIBIT INDEX TO FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995

                               FOOTNOTE REFERENCES

 (1) This document is incorporated by reference from Bankers Trust New York
     Corporation's Form 8-K dated September 24, 1993, file number 1-5920.

 (2) This document is incorporated by reference from Bankers Trust New York
     Corporation's Form 8-K dated August 6, 1993, file number 1-5920.

 (3) This document is incorporated by reference from Bankers Trust New York
     Corporation's Form 8-K dated March 21, 1994, file number 1-5920.

 (4) This document is incorporated by reference from Bankers Trust New York
     Corporation's Form 8-K dated August 12, 1994, file number 1-5920.

 (5) This document is incorporated by reference from Bankers Trust New York
     Corporation's Form 8-K dated June 29, 1995, file number 1-5920.

 (6) This document is incorporated by reference from Bankers Trust New York
     Corporation's Form 8-K dated November 10, 1995, file number 1-5920.

 (7) This document is incorporated by reference from Bankers Trust New York
     Corporation's Form 10-K for the year ended December 31, 1986, file number
     1-5920.

 (8) This document is incorporated by reference from Bankers Trust New York
     Corporation's Form 10-K for the year ended December 31, 1983, file number
     1-5920.

 (9) This document is incorporated by reference from Bankers Trust New York
     Corporation's Form 10-K for the year ended December 31, 1987, file number
     1-5920.

(10) This document is incorporated by reference from Bankers Trust New York
     Corporation's Form 10-K for the year ended December 31, 1992, file number
     1-5920.

(11) This document is incorporated by reference from Bankers Trust New York
     Corporation's Form 10-K for the year ended December 31, 1993, file number
     1-5920.

(12) This document is incorporated by reference from Bankers Trust New York
     Corporation's Registration Statement on Form S-8 (No. 33-54971) as filed on
     August 9, 1994.

(13) This document is incorporated by reference from Bankers Trust New York
     Corporation's Registration Statement on Form (No. 33-41014) as filed on
     June 10, 1991.

(14) This document is incorporated by reference from Bankers Trust New York
     Corporation's Proxy Statement dated as of March 21, 1988, file number
     1-5920.

(15) This document is incorporated by reference from Bankers Trust New York
     Corporation's Form 10-K for the year ended December 31, 1989, file number
     1-5920.

(16) This document is incorporated by reference from Bankers Trust New York
     Corporation's Form 8-K dated December 22, 1994, file number 1-5920.

(17) This document is incorporated by reference from Bankers Trust New York
     Corporation's Form 10-K for the year ended December 31, 1994, file number
     1-5920.

112  BANKERS TRUST NEW YORK CORPORATION AND SUBSIDIARIES