U.S. bank exposure to Mexico's largest steelmaker, Altos Hornos de Mexico SA, and its parent company, Grupo Acerero del Norte, which declared bankruptcy last week, could be as high as $300 million, banking sources say.

Bank of America is believed to have the most exposure, with about $126 million in direct loans to the failed steelmaker. Bank of America declined to comment.

Other U.S. banks with exposure to Ahmsa include:

Chase Manhattan Corp., which retained $2.2 million of a $33.7 million loan it syndicated. The loan was guaranteed by the U.S. Export-Import Bank.

J.P. Morgan syndicated a $330 million loan for the group in 1997 and retained an undisclosed portion.

Citigroup has some $30 million in loans to Ahmsa, and Banco Inverlat, in which Bank of Nova Scotia holds a major stake, is owed around $85 million.

WestMerchant Bank Ltd., a unit of Germany's Westdeutsche Landesbank, is owed $49 million, banking sources estimated.

Bankers said they hoped to recover some of their funds because three Mexican companies have submitted bids to acquire the failed steelmaker.

Ahmsa and its parent company owe about $2.3 billion, including some $1.3 billion in bank loans, slightly over $500 million in bonds, and several hundred million dollars in commercial debts. Ahmsa owes $1.9 billion, and Grupo Acerero del Norte owes about $330 million.

The two companies filed for Mexican court protection from creditors last week after failing to make payments on their bonds and loans.

Banamex, Mexico's biggest bank, seized 17% of Ahmsa's stock that it held as collateral against $150 million in loans to Grupo Acerero, which now owns 57% of the steelmaker.

Ahmsa is the second Latin American steelmaker to be hurt by reduced demand and falling prices. Siderurgica del Orinoco SA, Venezuela's largest steelmaker, also is having financial difficulties.

Ahmsa's default is the single biggest by a private Latin American borrower in nearly two decades. Bankers said they consider it an isolated problem, but said they are reviewing similar exposures.

"I doubt this is going to affect negatively all of Mexico," said Brian O'Neill, managing director in charge of Latin America at Chase Manhattan. "But it could trigger a more critical review of banks' exposure to steel industries in all emerging-market countries."

The sale of Ahmsa is being handled by J.P. Morgan & Co. The Blackstone Group is in charge of the debt restructuring.

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