NEW YORK -- A settlement reached by the government and liquidators of the Bank of Credit and Commmerce International could help speed the sale of BCCI's bank subsidiary in Washington.

Under the agreement, announced by Manhattan District Attorney Robert Morgenthau at a press conference Thursday, up to $270 million in frozen BCCI funds can be used to recapitalize the subsidiary, First American Bankshares Inc., and another U.S. unit, Independence Bank in Encino, Calif.

Balance for Creditors

The balance of the $550 million settlement will be placed in a second fund, to be administered by the liquidators and used to reimburse BCCI customers in other countries who lost their deposits when the bank's $20 billion in assets were seized in eight nations on July 5.

Mr. Morgenthau did not specify how much would be made available to First American, a $9 billion-asset multibank holding company that suffered large deposit withdrawals because of its ties to BCCI. But his spokesman said that the company's capital requirements "will be addressed if needed."

Quick Fix for Independence

Some $5 million will be paid immediately to Independence Bank in exchange for newly issued shares that will be placed with the bank's trustees pending a sale of Independence, Mr. Morgenthau said.

Jonathan Winer, counsel to Sen. John Kerry, D-Mass., who has spearheaded an investigation into BCCI over the past several years, said the settlement could pave the way for the sale of First American.

He said the action wipes out claims that BCCI creditors, depositors, and shareholders could attach against the company, which lost $38 million in its third quarter and has been battered by the real estate downturn in the Mid-Atlantic.

"It goes a long way to making the First American stock marketable," he said.

Deal Called Positive

George Davis, First American's newly elected president and chief executive, said, "We are obviously pleased that the various regulatory authorities have settled on satisfactory terms. The settlement of this dispute is only a positive for First American."

After BCCI's secret and illegal ownership of First American was disclosed in March, the Luxembourg-based bank agreed to sell its majority stake.

Six Guilty Pleas Entered

Under the agreement announced Thursday, BCCI pleaded guilty to the top six counts of a 12-count indictment brought July 29 by a New York County grand jury.

The bank also agreed to cooperate with the ongoing investigations by the Manhattan district attorney and the Department of Justice, pay a $10 million fine to New York State, and reimburse the district attorney's office for the cost of the investigations.

The charges include fraud, money laundering, and massive larcenies.

Mr. Morgenthau said the agreement does not affect pending criminal charges against senior BCCI executives.

He added that the district attorney's office is continuing its investigations into the bank's activities and into its dealings with other banks.

Mr. Barr said BCCI's agreeing to the charges "could take years off the time it would otherwise take to investigate and prosecute individual wrongdoers."

In addition to agreeing to plead guilty to the New York indictment, BCCI has also agreed to plead guilty to racketeering charges and admit that it deceived Federal regulators by secretly acquiring ownership of Independence, First American, and National Bank of Georgia.

The bank has also agreed to plead guilty to fraudulent dealings in $25 million worth of stock in the failed CenTrust Savings Bank of Miami.

That indictment charges BCCI's founder Agha Hassan Abedi, another top executive, Swaleh Naqvi, and Saudi investor Ghaith Pharaon, with manipulating the price of CenTrust stock issued in order to help raise capital for the failed bank.

New York state prosecutors have also charged Mr. Abedi and Mr. Naqvi with fraud, falsifying records and stealing $30 million from the bank.

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