Citicorp Expects Loan Woes to Rise : Banking: Recession and the Northeast’s weak real estate market are blamed for an increase of at least $900 million in problem commercial loans.

Citicorp, the nation’s largest banking company, expects its problem commercial loans to rise sharply in the first quarter by $900 million to $1.1 billion, Thomas E. Jones, an executive vice president, said Thursday.

Jones attributed the increase in those non-performing loans to the national recession and oversupply of commercial real estate in the Northeast. He said the jump is in line with increases in the last two quarters of 1990. But he declined to predict how much in the first quarter the company will set aside to cushion against loan losses. The figure will have a direct impact on the company’s earnings.

In its just-released annual report, the New York-based parent of Citibank disclosed that non-performing commercial loans as of Dec. 31 amounted to $8.64 billion, up from $7.24 billion at the end of 1989. Non-performing loans are those not accruing interest or on which interest is not being paid.

But Citicorp said its previously announced infusion of new capital through a $590-million investment by a Saudi Arabian prince was completed Thursday. Jones, in a meeting with journalists, said he expects the company to swiftly raise the rest of the $1 billion to $1.5 billion in new capital it has set out to get to ease regulators’ concerns and put the banking giant on a more solid footing.

Although he declined to provide specific details, Jones said, “We don’t expect the next step to be too far down the road.” In response to questions, Jones indicated that even though bank stocks have bounced back recently, it is probably still premature for big banks to consider raising capital through public offerings of common stock.

Although he did not say so, he seemed to imply that the additional capital, like the investment from Saudi Prince al-Waleed Bin Talal, would be in the form of convertible preferred stock.

The Citicorp executive also denied speculation that the federal government, concerned about the stability of the company and the nation’s banking system, had helped arrange the $590-million infusion. Jones declined to answer specifically when asked if the bank had evidence that funds for the investment may have come from sources other than the prince’s personal holdings, such as from Saudi government funds. Jones noted that Prince Waleed had done business personally with Citibank for many years.

Jones said Citibank will probably play a role in financing reconstruction projects in Kuwait, but he said he was not aware of any specific deals in progress. But noting the company’s heavy loans outstanding on new office buildings at home that have remained vacant, he joked, “Maybe we can find a way to transport a few very large buildings to Kuwait at a low cost.”