ABN Amro, Abbey, Other Banks May Face Enron Losses (Update2)
By Jennifer Freedman
London, Nov. 30 (Bloomberg) -- ABN Amro Holding NV, Abbey National Plc, National Australia Bank Ltd. and other lenders around the world disclosed potential losses of more than $1.9 billion from the collapse of Enron Corp.
ABN Amro, the largest Dutch bank, said it may set aside 110 million euros ($97.5 million) to cover loans to the U.S. energy trader. Britain's Abbey National said it's owed almost $165 million. National Australia and other Australian lenders said their Enron exposure totals about $350 million. France's Credit Lyonnais SA said it has $250 million of loans to Enron.
Enron would be the biggest bankruptcy ever -- and a blow for banks already posting earnings declines amid an economic slowdown and rising costs for possible loan defaults. Enron had more than $15 billion of debt and less than $2 billion of cash as of last week. It must pay $690 million to lenders by mid-December.
``This is having a ripple effect across the world,'' said Robert Penaloza, a fund manager at Aberdeen Asset Management Asia in Singapore.
At least 12 companies have reported exposure to possible losses from Enron tied to either loans or contracts with the Houston-based company.
ING to J.P. Morgan
ING Groep NV, the biggest Dutch financial-services company, Dutch financial-services company, said it holds about $195 million in unsecured loans and bonds of Enron. Canadian Imperial Bank of Commerce, the country's third-biggest bank, said Enron owes it $215 million, more than half in unsecured loans, letters of credit and derivatives.
In the U.S., Duke Energy Corp., J.P. Morgan Chase & Co., Williams Cos. and other companies together may lose more than $1.4 billion from a collapse of Enron. Bear Stearns Cos., the sixth- biggest securities firm by capital, said its exposure to Enron is $69 million.
Almost two dozen electricity and natural gas companies said Enron owed them about $700 million as of Wednesday, when Dynegy Inc. abandoned a merger, depriving Enron of cash it needs to avoid insolvency.
Ambac Financial Group Inc., XL Capital Ltd. and other bond and property-casualty insurers may absorb losses of more than $2 billion if Enron files for bankruptcy protection, said Morgan Stanley Dean Witter & Co. analyst Alice Schroeder.
ABN Amro and Abbey National
ABN Amro is one of the lenders behind Enron's $3 billion Indian power plant. Enron owns 65 percent of the Dabhol Power Co. project outside of Bombay, which has been hampered by cost over- runs, penalty claims for undelivered power, and conflicts with its only client, the Maharashtra State Electricity Board.
``Should the Enron situation escalate into a full-fledged bankruptcy, we may need to make a provision for 110 million euros for our direct exposure,'' ABN Amro spokesman Martin Winn said. ``Should there be a need to provide for it, we will do so in the fourth quarter of this year.''
London-based Abbey National said it may have to set aside 95 million pounds ($135 million) to cover possible losses from loans to Enron. Profit may be ``down'' in the second half from the year- earlier period because of Enron, said Finance Director Mark Pain in an interview.
Australia to Germany
National Australia said it has A$200 million ($104 million) in secured and unsecured exposure to Enron. ``We had already factored in provisions for this kind of event, and it is consistent with our bad debt outlook for this year,'' said Majella Allen, a spokeswoman.
Australia & New Zealand Banking Group Ltd., the fourth- largest Australian bank, said its direct exposure is $69 million and it has a further $51 million indirect exposure to the U.S. energy trader. ANZ said loans to Enron would not affect its earnings expectations. The bank has already said it expects to put more aside for bad loans this fiscal year.
``Their exposures are a little surprising, but then again Enron is such a huge organization and spans the globe so it deals with syndicates of banks for its facilities,'' said Bill Chatterton, head of equities at ABN Amro Morgans Ltd., the 50 percent-owned private client arm of ABN Amro Australia Ltd.
German banks also are seeing fallout. Dresdner Bank AG, which is owned by Allianz AG, said its exposure to Enron is less than $100 million. Deutsche Bank AG and Commerzbank AG said their exposure to Enron amounts to ``double-digit'' millions of euros.
Deutsche Bank, Europe's largest bank, has an exposure ``significantly'' below 100 million euros, said Ronald Weichert, a company spokesman.
Below is a list of some banks and their estimated exposure to Enron: J.P. Morgan Chase $500 Million Credit Lyonnais $250 Million Canadian Imperial Bank $215 Million ING Groep $195 Million Abbey National $164 Million Australia & New Zealand Banking $120 Million National Australia Bank $104 Million Dresdner Bank Less Than $100 Million ABN Amro $97.5 Million Deutsche Bank Less Than $90 Million Bear Stearns $69 Million Commerzbank Less Than $45 Million
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