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Bank of NY Writes Off $235M in Loans
By EILEEN ALT POWELL
.c The Associated Press
NEW YORK (AP) - The Bank of New York said Thursday that it would write off $235 million in bad loans in the fourth quarter but still meet analysts' earnings estimates.
The bank said the move was part of ``an accelerated loan disposition program'' dealing with loans or loan commitments to 24 telecommunications company and one energy trading company.
Bank officials would not identify any of the troubled companies, but the Bank of New York is known to have up to $100 million in exposure to the energy trading company Enron, which is in bankruptcy proceedings, and to be heavily committed to telecom ventures, including Winstar Communications Inc., which also has filed for Chapter 11 bankruptcy protection.
The company said these 25 ``credit relationships'' involved $758 million in loan commitments and $488 million in outstanding loans.
The announcement came as J.P. Morgan Chase & Co. said its exposure to Enron was $2.6 billion - more than double what it had previously disclosed - including nearly $1 billion it says it is owed by insurance companies.
The Bank of New York said its total fourth-quarter provision, including the write-offs under its accelerated program, would be $275 million. Still, it said, it would meet the 50 cents per share earnings target of analysts surveyed by First Call/Thomson Financial. That would be down from 52 cents in the third quarter and equal to year-earlier profits.
Shares changed hands in early afternoon at $41.23, up 42 cents, on the New York Stock Exchange.
Chairman and chief executive Thomas A. Renyi said in a statement that the loan disposition program ``removes a key risk that has been overhanging our performance.''
He said the bank had ``accelerated the culling of our loan portfolio'' and will focus future lending on higher-grade credits.
Sharada Vibhakar, an analyst at Pittsburgh-based Parker/Hunter Inc., said the Bank of New York, like other financial institutions, ``is taking write-offs at the end of this year so they can have a better balance sheet going forward'' when the economy begins to recover.
``They did have a large exposure in telecommunications, and the write-off assures investors they're taking an especially hard look at this,'' she added.
Also Thursday, the Bank of New York said it will report a $175 million insurance payment in the fourth quarter stemming from damage the firm suffered in the World Trade Center attacks on Sept. 11. It said it would continue to present claims and book additional recoveries in future quarters.
The Bank of New York, the nation's 14th largest bank, is a leading retail and corporate bank with extensive financial clearing operations. The bank was forced to evacuate its headquarters building near the trade center after the attacks and deal with extensive computer problems that disrupted clearing operations for several days.