Japanese Reportedly to Help B of A : Paper Says 9 Banks’ Will Purchase $250 Million in Notes

Representatives of nine major Japanese commercial banks have agreed in principle to accept a request by BankAmerica Corp. for support to help the second-largest U.S. bank to recover from heavy losses, according to a Japanese press report.

The report said representatives of the nine banks will meet tonight to discuss the matter. The group includes Mitsui, Sanwa, Sumitomo, Dai-Ichi Kangyo and Bank of Tokyo, the report said.

Frank Newman, vice chairman of BankAmerica, made the request to 23 leading Japanese institutions during his visit to Tokyo last month. His visit followed a trip by Chairman A. W. Clausen, former World Bank president.

Newman asked Japanese banks to purchase $250 million worth of subordinate capital notes and preferred stock worth $100 million. The requested sum will be part of a $1-billion capital increase planned by the San Francisco-based bank.

The economic daily Nihon Keizai Shimbun said the nine banks have agreed to accept $250 million worth of subordinate capital notes to contribute to the establishment of smooth financial relations between Japan and the United States.

The paper said securities and insurance firms are expected to accept $100 million in preferred stock.

It will be the first case of capital cooperation with an American bank by a group of Japanese institutions, the newspaper said.

“We have yet to make a decision on the request,” a spokesman for Mitsui Bank said. “It is hard for us to decide before terms for our cooperation are made known.”

A spokesman for Bank of America, BankAmerica’s major subsidiary, said “negotiations have been progressing.” He added that terms have been presented in separate negotiations with Japanese banks. He declined to disclose details.

BankAmerica has suffered heavy losses as a result of its heavy loan exposure to Brazil and other Latin American debtors and has been under pressure from U.S. authorities to raise its equity.

Kenichi Kamiya, chairman of the Federation of Bankers Associations who also is head of Mitsui Bank, said earlier it would be difficult for the federation to tackle the BankAmerica request as a group.

The federation is a group of 87 banking institutions.