Do you believe these guys? I thinks the bets are more leveraged.
ankers Trust hedge fund exposure at $1 bln
NEW YORK, Sept 30 (Reuters) - Bankers Trust Corp. has around $1 billion in outstanding loans to hedge funds,
which are 99 percent backed by cash and U.S. Treasuries, a source familiar with the firm's finances said on
Wednesday.
The bank's stock earlier Wednesday hit a new 52-week low of 53, down, 7-13/16, on fears the firm would post losses on loans extended to hedge
funds, unregulated funds for wealthy investors that use borrowed money to trade a variety of financial instruments. When the bank briefed analysts on
its exposure, or loans, to hedge funds, the stock quickly regained ground to close at 59, down 1-13/16.
''Ninety-nine percent of the exposure is marked to market daily, which requires hedge funds to put up cash and treasuries as collateral,'' the Bankers
Trust source said. The firm was likely to make a public announcement later Wednesday, he added.
Investors have become increasingly wary of banks and brokers' exposure to these types of funds after Long-Term Capital Management of Greenwich,
Conn., lost around $4 billion on ill-timed bets on global bond and stock markets.
The largest U.S. bank, Chase Manhattan Corp. (NYSE:CMB - news), on Tuesday told analysts its outstanding loans to hedge funds totaled $3.2
billion, of which 72 percent is backed by cash and U.S. Treasuries. Chase and Bankers Trust are among 11 firms that have put up $300 million apiece
to prevent Long-Term Capital from going under. |
