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To: Venkie who wrote (13347)	4/14/2000 3:24:00 PM
From: William Hunt	Respond to of 35685

Friday April 14, 3:04 pm Eastern Time Big U.S. banks vulnerable to venture capital slump By Mary Kelleher NEW YORK, April 14 (Reuters) - This week's sharp sell-off in U.S. stock prices spells trouble for big U.S. banks getting used to stashing away riches from the lucrative business of investing in start-up technology companies. Banks such as Chase Manhattan Corp. (NYSE:CMB - news) have built vast portfolios made up of publicly-traded Internet companies in which they invested early. These venture capital investments ballooned when Internet stocks shot up. ``The one that will suffer the most is the one suffering the most in today's market -- Chase,' Lawrence Cohn, an analyst at Ryan, Beck Southeast Research, said. ``There are not many other companies that mark as much of their portfolio to market as Chase does. It got the benefit of phenomenal market gains last year -- let's see what happens this year.' This week's steep slide in the tech-laden Nasdaq market will hurt the value of those invetsment portfolios and knock down bank earnings, analysts said. Banks also may have to wait for a big pay-off on their stakes in private companies, which may delay going public in the tumbling market, they added. Chase shares dropped 5 to 79-5/16 on Friday on the New York Stock Exchange, as did most broker and big bank stocks. Not all gains will vanish, since banks also hold stakes in private companies, which are relatively immune to Nasdaq's downturn, analysts said. In addition, many portfolios are run by seasoned investors who have weathered prior market dives, and not all investments are in tech companies, they said. ``What we are seeing in Nasdaq is not going to wipe out venture capital gains, but they will certainly be a lot lower if this keeps up,' Cohn said. ``The problem is that you are coming off such high base that for some of these companies, the drop will be noticeable.' The technology-laden Nasdaq composite index has dropped more than 30 percent since March 10, as investors dumped shares of pricey technology companies and put their money back into well-known, traditional U.S. companies. Nasdaq tumbled more than 5 percent, or 189 points, to 3,488 on Friday after the release of inflation data sparked fears about rising interest rates. The Dow Jones Industrial Average also slid 2.5 percent, or 276 points, to 10,646. Chase could be hit hardest, analysts said. For a time, it was among the biggest beneficiaries of the long-running bull market. Its Chase Capital Partners arm booked $1.31 billion in venture capital gains in the fourth quarter alone. ``Chase, of the companies we cover, has the highest level of market-sensitive revenues,' George Bicher, an analyst at Deutsche Banc Alex. Brown said. ``FleetBoston (NYSE:FBF - news) has significant exposure to Nasdaq through Robertson Stephens, which has been very active in the tech-driven new issue market. You can also include Citigroup, Bank of America Corp. (NYSE:BAC - news) and U.S. Bancorp (NYSE:USB - news), which owns Piper Jaffray. The list goes on and on.' Bicher cut his ratings on Chase and FleetBoston on Thursday because of their venture capital operations and exposure to the initial public offering market. But analysts also noted many banks' venture capital units are decades-old and have experienced turbulent markets. Investments were not limited to technology companies. ``These portfolios are very broad,' Robert Albertson, who runs investment firm Pilot Financial, said of banks' holdings. ``The venture capital portfolios at many banks have been managed for well over a decade and have gone through more bumps and grinds than what's going on here today in the tech sector.'