Chase Says T-Bonds May Offset Russia Losses

Chase Manhattan Corp. said a $477-million gain in Treasury bond investments during July and August may offset trading losses it suffered amid Russia’s bond default and currency devaluation. The gains in value were in a portfolio managed by the global markets business of the country’s largest bank, and “a portion of the unrealized gains in that portfolio may be considered as an economic offset to its trading portfolio,” Chase said in a filing with the Securities and Exchange Commission. Those gains could be used to boost third-quarter earnings only if the bank sells the bonds. Chase’s controller, Joseph Sclafani, declined to say if the bank plans to sell them. “While we had volatility on the trading side, with the flight to safety we’ve also seen some improvement” in Treasury bonds, Sclafani said. The portfolio containing the Treasury bonds, known as its available-for-sale portfolio, is managed as part of the bank’s risk management process. Earlier this month, Chase said it would take a $200-million charge against earnings for the third quarter because of conditions in Russia and Asia. It said revenue from trading currencies, bonds and other securities in July and August was about $160 million, dragged down as it lost money in Russia. Chase shares rose 44 cents to close at $45 on the New York Stock Exchange.