Bankers Trust Boosts Reserves, Reports a Loss
NEW YORK — Bankers Trust New York Corp., one of the largest U.S. banks, said Tuesday that it set aside an additional $1.6 billion to cover possibly bad Third World loans, drastically reducing its exposure to risky debts.
The move by the nation’s eighth-largest banking company will result in a third-quarter loss of $1.42 billion, as well as an undetermined loss for all 1989. A detailed earnings report is to be released Monday.
Bankers Trust’s decision mirrors action taken recently by a handful of other big banks, which also reported big quarterly losses.
Bankers Trust and the others attributed their protective moves to intensifying political and economic problems in debtor nations, such as Argentina and Brazil, as well as a growing sentiment in Washington toward forgiving some past debts.
The $1.6-billion special provision brings Bankers Trust’s allowance for credit losses to $2.9 billion, or around 85% of its medium- to long-term outstanding Third World loans.
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