Banks’ Enron Losses Seen Limited

Enron Corp.’s bankruptcy filing says the firm owes Citigroup Inc., J.P. Morgan Chase & Co. and Bank of New York Co. a combined $7.55 billion.

But analysts say the actual amount owed the big banks may be less than half that, because the loans have been syndicated among other lenders. Banks routinely sell parts of loans to other lenders as a way to disperse risk.

The big banks also are listed as holders of Enron bonds and other securities, but analysts say many of those securities are owned by investor clients of the banks.

“It’s very difficult to piece together the reality” of lenders’ exposure to Enron, said Robert Napoli, an analyst at brokerage ABN Amro Inc. who owns Citigroup shares.

Worries about financial companies with credit extended to Enron pushed many of those stocks lower on Monday. Citigroup fell 99 cents to $46.91, J.P. Morgan Chase lost $1.17 to $36.55 and Bank of New York lost $1.04 to $38.20, all on the New York Stock Exchange.

Among brokerages, Goldman Sachs fell $2.99 to $86.01 and Morgan Stanley slid $3.17 to $52.33, also on the NYSE.

Citigroup, the largest U.S. financial services company, is listed as having $3 billion in unsecured claims against Enron. But the bank itself probably is owed $1 billion at most by Enron, analysts say, and much of that is backed by collateral such as gas pipelines, on which Citigroup should be able to collect.

Citigroup’s earnings may be lowered by between $250 million and $500 million before taxes, or a relatively small 3 cents to 5 cents a share after taxes, as a result of its involvement with Enron, Napoli estimated.

J.P. Morgan Chase--which Enron says is owed $2.1 billion--says its true exposure totals about $900 million. Of that sum, $500 million is unsecured and $400 million is backed by collateral.

That exposure could result in a 15-cent drop in earnings per share for J.P. Morgan Chase, said Goldman Sachs analyst Richard Strauss. The company had been expected to earn $2.02 a share this year and $3.16 a share next year.

J.P. Morgan Chase also acts as a representative for holders of Enron bonds, so although the company is listed by Enron as a creditor on $1.9 billion of bonds, it may not be on the hook for a cent of that debt.

Citigroup and J.P. Morgan Chase on Monday helped provide $1.5 billion in debtor-in-possession financing for Enron. Such new financing is considered low risk once a company is in bankruptcy, because it moves ahead of debts on the books before the bankruptcy filing.