Revamped Latin Loans: A Peril Disguised

By Holland, Kelley | American Banker, February 20, 1992 | Go to article overview

Revamped Latin Loans: A Peril Disguised


Holland, Kelley, American Banker


Lenders upgrading the classification of their loans to certain Latin American countries are enjoying windfall gains in their reserve accounts.

But one respected banking analyst contends that the loans remain significantly under-reserved, considering their large secondary-market discounts.

Four major lenders - BankAmerica Corp., Chase Manhattan Corp., Chemical Banking Corp., and Bankers Trust New York Corp. - have started counting restructured Brady Plan loans to Mexico and Venezuela as "nonrefinancing-country assets."

Loans on Accrual Status

The accounting change reflects the facts that Mexico and Venezuela have completed their refinancing efforts under the international debt renegotiation plan named for Treasury Secretary Nicholas Brady and that their loans to those countries are now accruing interest.

Accordingly, the bank lenders have flet justified in reducing the reserves they hold against Brady Plan bonds.

But in so doing, the published ratios of their loan-loss reserves to nonrefinancing-country assets "may be seen as overstated," argued Raphael Soifer, an analyst at Brown Brothers Harriman & Co.

Getting down to cases, Mr. Soifer said, these banks are overstating their ratios (or understating their reserves) by anywhere from $274 million in the case of Bankers Trust New York Corp. to $948 million at Chemical Banking Corp.

Loans Swapped for Bonds

"Clearly, the banks are getting away with something," Mr. Soifer concluded.

The situation has developed in the wake of debt negotiations with Mexico and Venezuela. Several banks have agreed to swap loans to those countries for bonds that offer lower interest payments or an extended repayment period.

And in the fourth quarter, as the political and economic climates in those countries improved, banks deciced to reclassify the bonds. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Revamped Latin Loans: A Peril Disguised
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.