FDIC CHIEF SAYS MORE BANKS WILL BUILD RESERVES
Federal Deposit Insurance Corp
Chairman L. William Seidman told a bankers' meeting he thinks
more banks will follow Citicorp <CCI> and Chase Manhattan <CMB>
in building up their reserves to meet Latin American debt
problems.
    Seidman, speaking to an American Bankers Association trade
conference, said he did not think regulators would play as big
a role in encouraging banks to build up their loan-loss
reserves as the marketplace would.
   
    My guess is that we as regulators won't become the key
factor. I think the market system will get most of the other
banks to follow suit," Seidman told some 3,000 executives
attending the ABA's National Operations and Automation
Conference.
    In the past two weeks, Citicorp has added three billion
dlrs and Chase Manhattan, 1.6 billion dlrs, to their loan-loss
reserves.
   
    "I think that most banks are going to find it irresistible
to move forward on the same type of reserving because, if they
don't, their future earnings will be penalized as they hold up
their reserves on a quarter-by-quarter basis," Seidman said.
    He said Chase and Citibank, by setting aside huge amounts
at one time,  have put their losses behind them and will show
much better future earnings.
    That, he said, will put pressure on more banks to follow
suit.
 Reuter
