Olympia & York Developments Ltd. defaulted on a $377 million real estate loan Wednesday, but the banks agreed to hold off on foreclosure at least until debt restructuring talks with the developer begin next week.

"There's an informal standstill agreement," a source close to the developer said. "Nobody's doing anything."

Separately, a regulatory filing by the developer showed that Citicorp's Canadian unit is owed $250 million under a 1988 loan to Olympia.

First Look at Exposure

The filing provided the first specific example of the bank's exposure since the developer disclosed a "liquidity crisis" last month. analysts have said Olympia may owe Citicorp as much as $500 million.

Bank of Nova Scotia and Canadian Imperial Bank of Commerce dealth the developer a setback by refusing to extend the $377 million loan on the 68-story Scotia Plaza in toronto. But by holding off on foreclosure, they kept alive hopes that $18.5 billion of debt can be restructured outside of bankruptcy court.

In a bankruptcy, the developer and the banks cede control of their fate to the court. But a developer might choose bankruptcy court if one lender were to foreclose, reducing the pool of collateral it can draw on to secure a group of lenders.

Alternatives Are Limited

Given the size of their exposures, "The banks have no alternative but to sit down with" Olympia, said Brian Neysmith an analyst for Canadian Bond Rating Service.

In addition, Reuters reported the developer was negotiating a deal involving its Exchange Tower Headquarters in Toronto to cover commercial paper payments due Wednesday. …