FleetBoston Sells $1 Billion in Troubled Loans

FleetBoston Financial Corp., one of the top U.S. banks, said it sold $1 billion of troubled commercial loans to New York investment bank Patriarch Partners. The move could spur other U.S. banks to consider unloading debt, in a bid to soothe widespread concerns about bad loans in a slowing U.S. economy. “It was a brilliant move,” said Michael Plodwick, an analyst at UBS Warburg. “I think other banks will look at it, though I don’t know if they can take advantage of it to the same degree Fleet did because Fleet’s reserves are much stronger.” Boston-based Fleet received $725 million in cash and a $203-million note for the troubled commercial loans. FleetBoston already had marked down the value of the loans from $1.35 billion to $1 billion and will take a $75-million hit to its reserve portfolio in the deal, analysts said. The move will reduce FleetBoston’s loans with potential repayment problems by 10%, the company said. It will not affect fourth-quarter earnings. FleetBoston’s stock rose $1.31 to close at $42.69 on the New York Stock Exchange.