N.Y. Bank Offers to Buy Closed Ohio S

Chemical Bank of New York on Friday formally announced its intention to buy Home State Savings Bank, but officials cautioned that it will be at least another week before Home State’s 49,000 depositors get their money.

Gov. Richard F. Celeste announced that Chemical Bank had written state Savings Supt. Robert McAlister of its intent to purchase Home State of Cincinnati, with 33 branches in Ohio.

Chemical Bank representatives will be at Home State’s main office Monday to begin examining the books and work toward specific terms for the deal.

Legislation Required

Legislation will then be needed to detail terms of the sale, including an infusion of taxpayer funds that could run into strong opposition in the General Assembly.

Officials said the legislation probably would not be ready until April 15, and depositors could not get their money until that is complete.

Home State closed March 8 after a three-day run on deposits prompted by the collapse of a Florida securities firm, ESM Government Securities Inc., in which Home State had invested heavily. Runs began on deposits at other privately insured Ohio thrifts a few days later, and Celeste ordered all state-chartered savings and loans closed March 15.

All have since been given permission to reopen for at least limited service.

Bipartisanship Sought

Celeste, a Democrat, expressed hope Friday that members of both parties, who have worked together to reopen the state’s thrifts, “will continue that bipartisan effort with a minimum of political wrangling.”

However, almost as Celeste spoke, Senate President Paul E. Gillmor, a Republican, issued a statement in which he said the state should consider taking over Home State.

Under the Chemical Bank proposal, he said, the state would put up a major share of the money but would enjoy none of the benefits of ownership.

The governor refused to provide numbers on the proposed Chemical Bank deal, but Gillmor--who sat in on most of the negotiations--said it calls for using $90 million in the private Ohio Deposit Guarantee Fund and $80 million in tax funds, while Chemical Bank would put in $21 million as a premium for entering Ohio’s markets.

Raymond Sawyer, Celeste’s chief of staff, shrugged off Gillmor’s proposal.

‘Positive Proposal’

“We have a very solid and positive proposal to consider right now,” Sawyer said.

In addition to paying a premium, Sawyer said, Chemical Bank will have to recapitalize Home State, which has liabilities in excess of $500 million. He said the deal could also require a buyer to repay at least some of the tax funds from future profits.

Sawyer said the state also will push to recover tax funds from lawsuits pending against Alexander Grant Co., Home State’s accounting firm, and Home State’s directors. The suits seek damages totaling about $700 million, he said.

Some lawmakers said the use of taxpayers’ money could run into constitutional problems, but Sawyer said the public funds could be channeled through a nonprofit depositors’ assistance corporation, which he believes would be allowable under the Ohio constitution.