$19.5M Korean Chargeoff for Hawaiian Bank
HONOLULU - Pacific Century Financial Corp. said late Wednesday that it charged off $19.5 million in soured loans to a South Korean conglomerate and put another $10.7 million on nonperforming status during the fourth quarter.The actions pushed net chargeoffs for the quarter to $36.8 million, exceeding the company's quarterly loan loss provision of $20.9 million.
The company said it filled in the gap by drawing $16 million from its reserves, which had been beefed up to prepare for the effects of Asian economic turmoil.
The banking company did not identify the borrowers, but observers have speculated that the problem is with Daewoo Corp. Pacific Century first disclosed the problem in its quarterly Securities and Exchange Commission filing in November.
Also Wednesday, the $14.4 billion-asset company reported a 7% gain in fourth-quarter profits, to $38 million or 45 cents a share, two cents above analysts' estimates.
Australia Bank Plan Syndications Unit in U.S.
NEW YORK - National Australia Bank Ltd. is launching a loan syndications business for the Americas, the bank said Thursday.The business, to be based in New York, will be headed by Matthew A. Woolf, a former head of syndications for BHF Capital Corp., a German merchant bank. Mr. Woolf was also a loan executive at Imperial Bank of Japan and Manufacturers Hanover Corp., a predecessor to Chase Manhattan Corp. He will report to Tom Hunersen, executive vice president and general manager of global wholesale financial services.
National Australia, with $200 billion in assets, said the syndication business would be geared to benefit the bank's global clients.
The bank has syndication teams in Sydney, London, Hong Kong, and Wellington, New Zealand.
Suit Says 2 French Banks Caused Fund's Failure
NEW YORK - Societe Generale SA and Credit Lyonnais SA, France's third- and fifth-largest banks, caused the collapse of a Florida-based hedge fund by refusing to honor forward currency contracts after the 1998 devaluation of the Russian ruble, the fund's liquidators assert in a lawsuit.The fund, run by West Palm Beach-based III Offshore Advisors, had used about $400 million in capital as collateral to buy as much as $5 billion in securities and other assets. It was unable to cover losses stemming from an investment in $900 million worth of Russian treasury bills.
In the suit filed Wednesday in New York State Supreme Court, the liquidators of the High Risk Opportunities Hub Fund contend that the French banks refused to meet the fund's margin calls.
The default was followed by a plunge in the ruble, putting the banks "out of the money" under terms of the currency contracts and obliging them to transfer cash to the fund, the suit asserts.
The banks' failure to honor the contracts forced the fund into liquidation proceedings in the Grand Court of the Cayman Islands on Sept. 1, 1998, the suit says. The banks intended to force the fund into bankruptcy, "in the expectation that their transactions with the fund would be valued more favorably in that event than they otherwise would be," the suit says.
Societe Generale spokesman Michel Thibout said the suit involved a dispute over the interpretation of a clause in the contracts.
After Russia devalued the ruble, the contract became null and void, Mr. Thibout said. The bank is "very confident" about winning the case, he said. Credit Lyonnais spokesman Bertrand Hugonet declined to comment.
- Bloomberg News