National Westminster Posts a $66 Million Loss
National Westminster Bancorp, the U.S. unit of Britain's National Westminster PLC, continued a string of dismal earnings reports by posting a $65.7 million loss for the third quarter.
The loss was slightly narrower than the $85.1 million deficit posted in the second quarter, but wider than the $35.3 million loss in the third quarter last year.
John Tugwell, chairman and chief executive of the $21.5 billion-asset bank based in New York, said NatWest will probably post another loss in the fourth quarter but return to profitability next year.
More to Come
"There's still a black hole," said Chris Wheeler, an analyst with Lehman Brothers International in London. "It's by no means the end of the story."
Including additional provisions, NatWest has set aside $676.4 million against slightly over $1.3 billion in nonaccruing loans, or 52% of loans more than 90 days past due.
An additional $380.2 million in foreclosed real estate brings NatWest's total nonperforming assets to $1.684 billion.
Including foreclosed real estate, NatWest's coverage for problem assets amounts to only 39.9%, compared with a U.S. regional bank average of 61% and a money-center bank average of 56%, Mr. Wheeler said.
NatWest has lost $341.7 so far this year, nearly three times the amount it lost over the first nine months in 1990.
To stem U.S. losses earlier this year, the parent company sent Mr. Tugwell from London to take over as chief executive. Since March, it has pumped in $450 million in fresh capital.
NatWest also separated its U.S. units into wholesale banking in New York and retail in New Jersey, part of a broad reorganization aimed at trimming costs and developing relationship-based businesses.
To date, however, the results have been mixed, analysts said.
Since third-quarter 1990, NatWest has cut total assets 6.7% to $21.5 billion, and total loans 12.9% to $14.3 billion.
Noninterest income rose 35% to $81.6 million, mostly from a one-time earning of $15.7 million from sale of securities. Operating expenses, mainly linked to foreclosing real estate, rose 16% from the same quarter last year, to $204.5 million.