Magazine article American Banker

Luxembourg Is Left Holding 25% Stake in First American

Magazine article American Banker

Luxembourg Is Left Holding 25% Stake in First American

Article excerpt

Luxembourg Is Left Holding 25% Stake in First American

WASHINGTON - The multinational regulatory crackdown on Bank of Credit and Commerce International has left Luxembourg's bank regulator holding at least 25% of the stock of First American Bankshares Inc. of Washington.

The Luxembourg holding complicates efforts by the U.S. Federal Reserve Board to get the First American stock in the hands of new investors.

The regulators in Luxembourg obtained the stock last Friday when they seized control of BCCI's headquarters there, according to the Federal Reserve. Bank regulators in eight countries acted in concert against BCCI, citing evidence of massive fraud. BCCI was operating in 69 countries and had gotten control of First American without the knowledge of U.S. regulators.

Sale of Stake Was Ordered

Earlier this year, the Federal Reserve Board ordered BCCI to sell its First American stake. The order still stands, but the sale has been complicated by last week's seizure.

"We are going to have to talk with Luxembourg authorities about divestiture," said Virgil Mattingly, the Federal Reserve's general counsel. "I think the next step is to determine when the plan will be put into effect."

Mr. Mattingly said he hoped to talk within days with Luxembourg authorities about the disposition of the stock.

Loans Were Defaulted

The Fed says BCCI made loans to First American stockholders who pledged their shares as collateral. …

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