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Bankers Trust Reclassifies $540 Million In Brazilian Loans

April 8, 1987

NEW YORK (AP) _ Bankers Trust New York Corp. on Wednesday placed $540 million in medium- and long-term Brazilian loans on non-accrual status, a move that will reduce its first quarter net income by about $7 million.

Bankers Trust, the nation’s eighth-largest bank holding company, was the latest major U.S. banking concern to take the action in response to Brazil’s suspension of interest payments on $67 billion in foreign bank debt.

Brazil suspended the payments on Feb. 20 pending a restructuring of the debt.

Loans generally are not placed on a non-accrual basis until interest payments are more than 90 days overdue. Bankers Trust and other major Brazilian lenders have said they anticipated negotiations on the payment moratorium would extend past the 90-day limit.

But the banks also generally have indicated they expected the debt negotiations to lead to resumption of interest payments.

When loans are classified as non-accruing, the banks record interest payments when they actually are received, rather than when they are due. As a result, reclassifying the loans forces the banks to subtract interest payments originally recorded but not yet received.

Bankers Trust also said that if the interest payment suspension continued through year’s end its annual net income would be reduced by about $30 million.

Bankers Trust had first quarter net income of $115.9 million, or $1.64 per share, last year. Net income for all of 1986 was $427.9 million, or $6.01 per share.

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