CHICAGO - Continental Bank Corp.'s 1993 and subsequent earnings will get a boost from a recovery in risk-management profits, sustainable equity-investment revenues, and strong returns from trading in distressed debt.
Several senior Continental executives highlighted in interviews the importance of these businesses to the bank's revenues in 1993 and beyond.
Contributing 20% of Revenues
Trading and equity investments accounted for 20% of Continental's nine-month revenues of $687 million this year. The 30th-largest U.S. banking company earned $161 million in the period.
Mike O'Neill, head of capital markets, investments, and trading, said the biggest swing factor in Continental's earnings will be a return to profitability of its risk-management operations, which include derivatives, swaps, and options.
Continental has lost money from those activities so far in 1992 and will continue to lose in them until the middle of 1993, said Ken Cunningham, head of risk-management products.
In June, Mr. Cunningham was hired to revamp Continental's risk-management unit. He is cutting costs and stressing less-risky and more-lucrative areas such as risk management for customers as opposed to proprietary trading. He sees broadening applications to help customers manage risk.
Another lucrative area for Continental is trading debt of developing countries and distressed companies. William Goodyear, head of loan distribution, said trading distressed assets had been growing and would keep enjoying double-digit growth, while developing-country debt trading will fade as those nations heal.
