Great Western Discloses SEC Inquiry

The Securities and Exchange Commission is conducting an “informal inquiry” related to Great Western Financial Corp.’s disclosures last year of real estate loan problems that caused a $77.3-million loss for the Beverly Hills-based thrift in last year’s fourth quarter.

In an SEC filing, the parent of Great Western Bank said that it was notified of the probe on Friday and that the agency will be requesting documents related to its 1989 financial statements. Great Western said the inquiry involves the timing of its disclosures as well as “internal controls” related to the devaluing of assets and setting aside of about $200 million to deal with the problem loans.

Great Western, the nation’s second-largest thrift, first disclosed that it would post a fourth-quarter loss last November, blaming troubled loans on commercial projects and apartment buildings. Most of those projects are in Arizona, Texas and Florida.

Great Western Senior Vice President Ian D. Campbell said Great Western believes that it has done nothing wrong. “We stand by the integrity of our 1989 financial statements. We believe they fairly and accurately represent our financial condition,” Campbell said.

Great Western is one of several financial institutions coming under extensive SEC review. The reviews tend to center on whether loan losses are being disclosed promptly. Institutions are being investigated in the wake of the nation’s S&L; debacle and huge real estate problems suffered by banks in the Northeast, Southeast and Arizona.

First Interstate Bancorp, for example, has been the subject of a similar informal inquiry related to disclosures of real estate problems last year in its Texas and Arizona units. A spokesman for the Los Angeles-based banking firm said Wednesday that the SEC requested documents in April, but the spokesman added that the bank has received no additional requests since then.