Amadeusz Juskowiak

Economic spotlight bankamerica bac

BankAmerica Corp is not under pressure to act quickly on its proposed equity offering and would do well to delay it because of the stocks recent poor performance banking analysts said

Some analysts said they have recommended BankAmerica delay its up to onebilliondlr equity offering which has yet to be approved by the Securities and Exchange Commission

BankAmerica stock fell this week along with other banking issues on the news that Brazil has suspended interest payments on a large portion of its foreign debt

The stock traded around 12 down 18 this afternoon after falling to 1112 earlier this week on the news

Banking analysts said that with the immediate threat of the First Interstate Bancorp I takeover bid gone BankAmerica is under no pressure to sell the securities into a market that will be nervous on bank stocks in the near term

BankAmerica filed the offer on January 26 It was seen as one of the major factors leading the First Interstate withdrawing its takeover bid on February 9

A BankAmerica spokesman said SEC approval is taking longer than expected and market conditions must now be reevaluated

The circumstances at the time will determine what we do said Arthur Miller BankAmericas Vice President for Financial Communications when asked if BankAmerica would proceed with the offer immediately after it receives SEC approval

Id put it off as long as they conceivably could said Lawrence Cohn analyst with Merrill Lynch Pierce Fenner and Smith

Cohn said the longer BankAmerica waits the longer they have to show the market an improved financial outlook

Although BankAmerica has yet to specify the types of equities it would offer most analysts believed a convertible preferred stock would encompass at least part of it

Such an offering at a depressed stock price would mean a lower conversion price and more dilution to BankAmerica stock holders noted Daniel Williams analyst with Sutro Group

Several analysts said that while they believe the Brazilian debt problem will continue to hang over the banking industry through the quarter the initial shock reaction is likely to ease over the coming weeks

Nevertheless BankAmerica which holds about 270 billion dlrs in Brazilian loans stands to lose 1520 mln dlrs if the interest rate is reduced on the debt and as much as 200 mln dlrs if Brazil pays no interest for a year said Joseph Arsenio analyst with Birr Wilson and Co

He noted however that any potential losses would not show up in the current quarter

With other major banks standing to lose even more than BankAmerica if Brazil fails to service its debt the analysts said they expect the debt will be restructured similar to way Mexicos debt was minimizing losses to the creditor banks