Some Daewoo Losses May Be Recovered
HONG KONG - U.S. banks stand to recover a portion of the hundreds of millions of dollars in losses they have recorded on loans to South Korea's Daewoo Corp.On Sunday banking companies led by Chase Manhattan Corp., HSBC Holdings PLC, and ABN Amro NV agreed to write off 60% of their loans to the financially ailing conglomerate. Banks had originally agreed to write off no more than 55%, rejecting demands by the South Korean government that they write off close to 65%.
Banking sources estimated that U.S. banks hold close to $1 billion of some $6.8 billion in loans to Daewoo. Most of the rest is held by several hundred European and Japanese banks.
U.S. banks had a combined exposure of $13.5 billion to South Korea at the end of September, down from $14.6 billion at yearend 1998. Several U.S. banks that had already written off their loans to Daewoo threatened last week to declare Daewoo bankrupt and seize its overseas assets. This, bankers said, would have made any settlement much more difficult.
Chase Manhattan, one of the largest U.S. creditors, wrote off $287 million in loans in the fourth quarter. The bank attributed most of the writeoff to loans to a single large Asian borrower. On Thursday, Honolulu-based Pacific Century Financial wrote off $19.5 million in loans, reportedly to Daewoo, and put $10.7 million on nonperforming status.
- James R. Kraus
Former Fed Governor Sees Big Rate Hikes
NEW YORK - Lawrence B. Lindsey, a former Federal Reserve governor, warned that the Fed is likely to raise interest rates dramatically this year to cool down the economy.During a luncheon attended by 150 bankers and sponsored by the Institute of International Bankers, Mr. Lindsey said that the Federal Reserve could conceivably raise interest rates as much as 150 basis points this year, though he expects a more modest tightening.
Mr. Lindsey, the managing director of Economic Strategies Inc., is an adviser to Republican presidential candidate George W. Bush.
- Tania Padgett
BB&T Puts Its Name on Factoring Unit
WINSTON-SALEM, N.C. - BB&T Corp. said Monday that it has renamed its High Point, N.C.-based factoring arm BB&T Factors Corp.The subsidiary, which buys and manages account receivables primarily in the furniture, textiles, and home furnishing industries, was acquired in 1997 under the name Phillips Factors Corp.
The $41.6 billion-asset bank company has also changed the name of Phillips Financial, another subsidiary, to BB&T Payroll Resources. That company buys and manages accounts receivables and provides payroll services for the temporary staffing industry.
- Louis Whiteman
Research Firm Pushing Ind. Thrift to Sell
CHICAGO - Podesta & Co., a Chicago-based independent research company which described itself as a shareholder advocate, is pressing yet another financial institution to sell.Christopher R. Raffo, the senior vice president of Podesta, shot off a letter to the chairman of Home Federal Bancorp, a thrift in Indianapolis, warning that if the company does not sell itself soon, its price earnings multiple is likely to fall into the single digits. Home Federal trades at 11 times 1999 earnings.
As reported, Podesta also is pressuring PS Financial of Chicago to sell.
Mr. Raffo said he believes that Fifth Third Bancorp. in Cincinnati, may be interested in the $800 million-asset Indianapolis thrift. Fifth Third did not return phone calls.
- Tania Padgett
Barclays Starts Global Financing Subsidiary
NEW YORK - Barclays Capital, the investment banking arm of Barclays Bank PLC said Monday that it had created a new global financing unit that would combine its equity finance, prime brokerage, U.S. repurchase agreement, and global futures units.Kevin Mirabile, managing director and head of U.S. government bonds, equity financing, and futures, is heading the unit from New York, the bank said in a release.
- Laura Mandaro