Citicorp denied financial marketrumors that it has written off some of its loans to Latin
American debtors,
    "Rumors that we have written off any of our Latin American
debt are unfounded," a Citicorp spokesman told Reuters in
response to London-based rumors in the money markets.
    Citicorp is the largest bank group in the U.S. and one of
the biggest lenders to Latin America, with some eight to nine
billion dlrs outstanding to Brazil, Mexico and Argentina, bank
analysts said.
    In response to more specific market rumors that it had
taken action on its exposure to Brazil, Citicorp said it made
an 8-K filing on the subject with the Securities and Exchange
Commission on Tuesday in relation to a registration statement
for a preferred stock issue.
    Citing the filing, Citicorp said that Brazil's recent
suspension of interest payments on 68 billion dlrs of
commercial bank debt and related actions "may require Citicorp
to place 3.9 billion dlrs of intermediate and long-term
Brazilian loans on a cash basis."
    When loans are placed on a cash basis, interest or
principal payments are only booked when received instead of
being accrued on their due dates, analysts noted.
    However, Citicorp said in the 8-K filing that "it is
premature to make such a decision at this time in view of the
fluidity of the situation and management's high confidence in
the long-term outlook for Brazil."
    Brazil's new central bank governor Francisco Gros met
senior commercial bankers here on Wednesday and Citicorp said
formal talks on Brazil's recent actions and future financing
needs should begin in "the near future".
    Citicorp said in the filing, "the issue will be
re-evaluated at the end of the first quarter."
    The bank group continued, "if it is decided that these
loans to Brazil should be placed on a cash basis, Citicorp
estimates, based on existing interest rates, that the impact in
the first quarter would be approximately 50 mln dlrs after tax
and for the full year would be approximately 190 mln dlrs after
tax."
    It added that these amounts include interest accrued in
1986 that has not yet been collected.
    Although Citicorp denied earlier rumors of major loan
writedowns, its warning that it may have to place some of its
Brazilian loans on non-accrual unnerved many Wall Street
investors.
    The common stock price was down one dlr to 51-1/8 after the
first hour on a volume of over 500,000 shares.
    However, Lawrence Cohn, analyst at Merrill Lynch and Co
Inc, said that the market's nervousness was not really
warranted.
    "Citicorp can afford it," he said. "The amounts they are
talking about are peanuts."
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