An announcement clarifying Deutsche's intentions could come as early as today, Monday, given the heightened media speculation around the deal, according to banking sources and analysts.

One source said Deutsche and Bankers had come under pressure to conclude talks because takeover rumours were affecting their share prices. In mid-morning trade, Deutsche shares were up 5.40 marks at 112.90, down from the day's high of 113.70.

But a Deutsche spokesman early on Monday declined to comment on the merger talk.

The German bank, which has made no secret of wanting to enlarge its US investment banking, could pay as much as $90 a share for the no 8 US banking company, which is grappling with losses in a competitive corporate finance arena.

Despite the strength Bankers could offer in terms of asset management,global custody and other strategic areas, the move would be costly for Deutsche, said BHF analyst Matthias Joerss.

"It's quite an expensive partnership for them at this point. We aren't sure how it will play out in the long term," he said.

Joerss said the merger would be a major step forward for Deutsche but that Deutsche's performance after buying UK investment house Morgan Grenfell raises doubts about the current merger prospects.

"So far the Morgan Grenfell story has been a little bit disappointing," he said. "If they have been very successful then fine, but given this experience we are not so sure about the success of realising synergies."

Keith Baird, banking analyst with Enskilda Securities in London said the deal would still leave Deutsche exposed on its most vulnerable front, Europe.

"I think that this deal is really only a halfway house because it leaves Deutsche Bank vulnerable in Europe where it has its key strategic questions," he said.

A tie-up between Bankers Trust and Deutsche Bankwould inject capital into the US bank, which is struggling with a $488 million third quarter loss, credit downgrades by US rating agencies and trouble in emerging markets and corporate finance markets, analysts said.

Bankers Trust, tarred in a derivatives scandal in the early 1990s, has been trying to fashion itself from a commercial into an investment bank under chairman Frank Newman, but it still lags industry giants such as Merrill Lynch and Co, which also makes it vulnerable, analysts said.

On the positive side, the deal would expand Deutsche's geographic reach and gain ground in the US investment banking market, a long-time goal, analysts said.

A purchase would also be able tap Bankers' expertise in junk bonds and bolster its European equities business after Bankers last year bought the pan-European equities business of Britain's National Westminster bank, analysts said.

Deutsche sources said last month they were interested in Bankers Trust but were concerned about the financial health of theinstitution.

Bankers Trust has also been stung by credit rating downgrades which analysts said would deter other institutions from doing business with Bankers. Deutsche's support would help its credit standing on Wall Street, they added.

Deutsche, Germany's largest bank, dwarfs Bankers Trust with a market capitalisation roughly six times as large.

If completed, the takeover would mark the latest German advance into the United States. In the largest industrial merger in history, Daimler-Benz AG earlier this autumn completed a merger with Chrysler Corp.

Also on Monday, German paper Frankfurter Allgemeine Zeitung cited "Wall Street rumours" as saying Deutsche Bank AG is preparing to hire former Citigroup Inc president James Dimon.

Dimon resigned from the world's largest financial company earlier this month in a management reshuffle.