Citicorp's stock went on a wild ride last week as investor fears mounted-and then abated-about the company's operations in Southeast Asia.

The shares surged on Friday by about 4% after plunging more than 2% the day before. Several large hedge funds had shorted the stock on reports that loan losses in the bank's Bangkok, Thailand, subsidiary were on the rise, market sources said.

"This was an example of the good ol' boy network," banking industry analyst Thomas H. Hanley of UBS Securities Inc. said of the stock's Thursday slide. "The hedge fund community clearly blew it out of proportion."

On Friday the recovery was complete, with Citicorp ranking among the biggest gainers on the New York Stock Exchange. The stock advanced $4.125, to $114.375, on a day when banks rallied in tandem with a strong bond market.

The Standard & Poor's bank index grew 2.41%, outpacing the Dow Jones industrial average, which rose 0.01%.

But Citicorp still has its doubters. Veteran bank analyst George M. Salem of Gerard Klauer Mattison & Co. cut his investment rating on Citicorp to "hold" from "buy" on Friday. "Up to now, emerging markets have been Citicorp's uniqueness and investor appeal," he said, "but this area is now under a cloud."

Citing "growing concerns" about the outlook for the bank's consumer business in Asia, Mr. Salem sliced his earnings estimate for 1997 to $8.40 per share from $8.50. He cut his 1998 estimate to $9.40 from $9.60.

"We see potential downside in the stock to about $100 a share" over the next three months, he said.

Mr. Salem, a longtime bull on Citicorp before Friday, worries about tightening spreads, rising delinquencies, and increasing loan losses in the bank's Asian loan portfolio. He pointed out that Southeast Asia's economy is in decline and the political landscape turbulent.

These trends are a special concern for investors in the big New York banking company, he said, because "Citicorp derives 12% to 15% of its earnings from consumer business in the Asia Pacific region."

Mr. Salem noted that Citicorp itself is flying caution flags. The bank mentioned pressure on its Asia-Pacific consumer banking profits in a recent first quarter 10Q filing with the Securities and Exchange Commission.

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Industry analyst Richard X. Bove of Raymond James & Associates, St. Petersburg, Fla., who downgraded Citicorp earlier in the month, agreed that the money center's overseas operations are becoming a thorn in its side.

Mr. Bove said that he has become increasingly anxious about the bank and its position in an unfolding money laundering scandal.

"The market doesn't care about this issue at all," said Mr. Bove. "But if the bank gets implicated in this (money laundering) case, it may prompt the government to examine the bank's other companies overseas, which could upset the business."

"If they are not big enough to get away with this, then they are going to have problems," he said.

However, Mr. Hanley, one of Wall Street's best-known bank analysts, just returned from a trip to scrutinize Citicorp's overseas operations. He said he is unconcerned about loan problems in Southeast Asia.

"There is erosion in spreads in Southeast Asia, and the economy there is in a decline," acknowledged Mr. Hanley. "But losses there will be offset by Latin America, which is booming."

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