Says Citicorp's Resignation as Agent Would Help
Ecuador has asked Citicorp to resign as agent for about $900 million in loans as part of an effort to help get debt restructuring talks started with that country.
A spokesman for Citicorp in New York said the banking company was willing to resign and was prepared to work with a successor as soon as one is picked by Ecuador.
U.S. bankers said a Citicorp resignation could help smooth the way for debts talks.
Earlier efforts stalled after Citicorp seized $80 million held by Ecuador in New York in May 1989 to offset a claim on loans.
New President Awaited
However, banking sources predicted that talks were unlikely to begin until after a new president takes office in Ecuador in mid-August.
Ecuador suspended payments on its foreign commercial bank debt in 1986 after a sharp drop in oil prices and later agreed to pay only $13 million in interest monthly, or roughly 30% of the interest due on its medium - and long-term borrowings.
The country owes foreign banks some $5 billion in principal on loans longer than one year and an estimated $1.5 billion more in arrears on interest payments.
It owed U.S. banks $500 million at yearend, including $312 million in short-term and lines, according to Federal Reserve Board figures.
The remaining $188 million represents only 30% of loans over one year actually owed to U.S. banks, since regulators have ordered U.S. banks to write down 70% of their medium - and long-term loans to Ecuador.
Among the major U.S. banking companies that have lent money to Ecuador are Citicorp, BankAmerica Corp., Chase Manhattan Corp., and Chemical Banking Corp.
One of the Last
Ecuador is one of the few remaining debtor nations that has yet to reach a debt restructuring agreement with foreign banks.
Bankers said Ecuador has been holding informal meetings with banks on starting talks toward a settlement but has been unwilling to make a commitment until Citicorp resigns.
Chase and Lloyds Bank PLC co-chair the bank advisory committee on Ecuador.
Banking sources noted, however, that Citicorp is legally barred from resigning as agent on its loan until Ecuador names a successor.
Others Ask Higher Fees
They added that although Ecuador has talked to several banks about talking as agent to replace Citicorp, the country has been so far unable to find a successor bank, mainly because it is unwilling to pay the higher fees other banks have asked for.
Separately, a member of Brazil's debt negotiating team in New York denied reports Monday that the country has reached a final agreement on arranging the collateral to back the country's debt-reduction agreement.
Jose Alvers, a member of the Brazilian team, said his country had agreed to provide $1 billion in collateral and match dollar for dollar any new money up to $600 million from banks and from multilateral lending agencies such as the International Monetary Fund.