Bank of New England May Post a $450-Million Loss

From Associated Press

Bank of New England Corp. on Friday estimated that it lost up to $450 million in the last three months of 1990, results that analysts said could plunge the bank into insolvency and force a government bailout.

The bank said it had not calculated the final figures for the fourth quarter, but it expected heavy losses from bad real estate loans.

The announcement scared some depositors. At a bank branch in the town of Lynn, north of Boston, long lines of customers waited to withdraw money.


The projected losses would wipe out the bank’s capital, which totaled $255 million as of Sept. 30, said Gerard Cassidy, an analyst at Tucker Anthony Inc.

He said that would mean that “at the close of business Dec. 31, Bank of New England Corp. would be technically insolvent.”

As the bank’s officials worried about mounting losses, a former Bank of New England vice president who approved more than $18 million in bad loans was arrested on charges of embezzlement and fraud, officials said Friday.

Lewis Donald Shattuck is accused of arranging kickbacks and false loan applications and falsifying records.

A federal indictment charged Shattuck with 49 counts of fraud that cost the bank more than $1.1 million.