SAN FRANCISCO -- BankAmerica Corp.'s plan to create a special bank for problem assets has been delayed and the unit may end up smaller than expected, according to analysts briefed by the company.

In a recent Securities Exchange Commission filing, BankAmerica said it was weighing the sale or transfer of as much as $4 billion in nonperforming loans, foreclosed property, and other assets to the collecting bank.

But some analysts now expect that far fewer assets will be moved to the unit because of the difficulty of finding an asset mix that appeals to investors.

"My guess is that there will be up to $2 billion," predicted Thomas K. Brown, analyst with Donaldson, Lufkin & Jenrette Securities Corp.

A Cause for Delay

The problem of selecting assets is also the key factor delaying creation of the collecting bank. BankAmerica was forced to junk the original timetable that called for a launch before the end of the second quarter, sources said.

"They are still talking late third quarter, but I'm getting signals that might be optimistic," said Lawrence R. Vitale, an analyst with Kemper Securities Group, Chicago.

BankAmerica, which has $120 billion in assets, declined to elaborate on the information contained in SEC disclosure documents. Additional details could be released Monday, when the company reports second-quarter earnings.

A collecting bank, or bad bank, as it is sometimes called, is a separately capitalized entity used to dispose of nonperforming assets.

The parent company takes a writedown on the assets transferred to the collecting bank and loses whatever income they may be producing. But the parent company's stock and debt become more attractive because of the reduction in problem assets at its main operating unit.

BankAmerica will use its bank mainly to hold problems loans and foreclosed property inherited from Security Pacific Corp. after the merger of the two California giants.

Some Performing Loans in Mix

But analysts also expect BankAmerica to put some of its own problem credits in the mix. The collecting bank is expected to hold real estate credits and commercial loans. Nonperforming loans that are still collecting interest and some performing loans will be included to give the unit an income stream.

On a pro forma basis, BankAmerica and Security Pacific had about $8.5 billion in nonperforming assets at the end of the first quarter. But only a small fraction are suitable for transfer to the collecting bank.

No loans with commitments for additional credit can be included, because the collecting, bank will not be in the business of lending.

Foreign Assets Excluded

In addition, the collecting bank will exclude foreign assets, such as Security Pacific real estate credits in Britain and Australia, and loans secured by land, Mr. Brown said.

The apparent reason is to make collecting bank securities easier to sell to investors who would prefer a purer play on domestic real estate.

BankAmerica will finance its collecting bank through stock and debt offerings, possibly including a special stock dividend to current BankAmerica shareholders.

It has hired Goldman, Sachs & Co. to sell collecting bank subordinated debt, a complex pricing and market-timing problem given the continuing decline in California real estate values.

BankAmerica is expected to price securities by marking the asset portfolio below its current market value. That would provide insurance against further drops in real estate prices.

Avoiding a Big Writeoff

At the same time, the company wants to avoid marking assets too low, forcing it to take an unnecessarily large writeoff.

BankAmerica will charge the collecting bank management fee equal to 5% of the units's cash flow minus operating expenses, according to published reports.

The accounting firms Arthur Andersen & Co. and Kenneth Leventhal & Co. are carrying out the enormous task of reviewing and forecasting cash flows of assets that may be transferred to the collecting bank, industry sources said.

In addition, the sources said, BankAmerica has hired a Northern California search firm to find a chief executive for the unit.

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