Continental Illinois Corp's &lt;CIL>Chairman John Swearingen said he sees negotiations to
reschedule Brazil's debt payments taking at least three to six
months.
    Brazil declared last month a moratorium on payment of
interest on its medium- and long-term debts. The moratorium is
expected to persist the entire time that debt scheduling talks
are under way.
    "I believe it will take three to six months, maybe longer,
for an arrangement to be worked out to reschedule Brazil's
debt," Swearingen told reporters at a press briefing.
    "I think Brazil will pay its debts in the long run. Just
how long the run is is anybody's guess," Swearingen said.
    Earlier the bank holding company said Brazil's moritorium
may force it to increase non-performing loans by 380 mln dlrs
and reduce pretax and net income by 10 mln dlrs in the first
quarter and 35 mln dlrs for the full year.
    The bank will decide March 31 whether to characterize these
loans as non-performing, William Ogden, chairman of the
Continental Illinois National Bank and Trust Co of Chicago,
Continental's largest subsidiary, said in response to an
inquiry.
    Ogden said the moratoriums will affect both pretax and net
income equally because the banking firm has tax credits to use.
    Swearingen predicted an increase in operating profits for
1987 because he sees higher income and reduced expenses.
Continental will reduce expenses through job cuts and reducing
office rental costs. In 1986 it cut about 850 positions.
    In 1986 it had net profits of 165.2 mln dlrs or 60 cts a
share, up from 150.5 mln dlrs or 53 cts a share.
    The bank transferred 459 mln dlrs of poor-quality loans and
other assets to the Federal Deposit Insurance Corp, FDIC,
during 1986. It can transfer bad loans under the terms of the
1984 restructuring agreement with the government.
    The bank will transfer the remaining 460 mln dlrs that it
is entitled to transfer to FDIC by September 26, 1987,
Swearingen said. It will choose loans based on ultimate loss
rather than their immediate effect on non-performing loans.
    In 1986 the bank's loans to the Midwest's middle market
rose 20 pct at a time of overall weak loan demand in the U.S.
    Concerning banking acquisitions, Swearingen said the bank
would like to buy additional suburban Chicago banks. In 1986 it
bought three small suburban banks.
    Swearingen said he is concerned that Continental will be
taken over because no bank in the Midwest region is large
enough to buy it, and New York money center banks are
prohibited by law from buying Illinois banks.
    He said, however, that the FDIC still has control over who
will eventually own the firm because it still holds the
equivalent of 148 mln common shares out of a total 215 mln.
    The FDIC sold 52 mln shares to the public last year and has
said it intends to sell the rest as quickly as possible. The
agency received the shares as part of its 4.5 billion dlrs 1984
bailout of the bank.
    Swearingen, who came out of retirement in 1984 to head the
struggling banking firm after a career as an oil industry
executive, said he will retire when the three-year period he
agreed to be Continental chairman ends in August. He would not
comment on a successor.
    The bank will expand its First Options of Chicago options
clearning unit into Tokyo, Swearingen said, but said its
doubtful lending to Japan will occur because that country
doesn't need external sources of cash.
 Reuter
