American Express to Take Charge on Tin Losses
American Express confirmed Friday that it expected to take a charge of up to $47 million for possible losses stemming from the collapse of the London tin market, but the company added that it expected to post a record first-quarter profit nevertheless.
American Express said in a statement that its Shearson Lehman Bros. securities and commodities unit “will post a large gain in net income as well, despite losses in the London tin market, and will report one of the best quarters in its history.”
In a filing with the Securities and Exchange Commission, American Express indicated that Shearson would set up a reserve of $17 million to $47 million to cover losses incurred from the forced liquidation of tin contracts following the collapse of the tin market.
American Express issued the statement following a story in Friday’s Wall Street Journal that said the SEC filing indicated that first-quarter net income would be reduced because of the special reserve.
Tin trading was suspended last October after the International Tin Council, a 22-nation group of producers that previously bought tin stocks to help support prices, said it was financially unable to continue the purchases. The council had outstanding obligations of about $1.3 billion.
The London Metal Exchange last month liquidated tin contracts for about $9,200 a metric ton, compared to the earlier prevailing market price of about $13,000 a ton.
Shearson sued the exchange and several British trading firms to overturn the forced liquidation.