MNC to cut foreign loan business

May 15, 1991|By Timothy J. Mullaney

MNC Financial Inc. said yesterday that it would cut back its international banking business as part of a broader restructuring to downsize the bank. It will lay off as many as 30 people and close offices in Hong Kong, Brazil and Luxembourg.

The company, whose international division once had nearly 100 employees, has already closed a London office.

Hugh A. Woltzen, MNC Executive vice president, said the company has been scaling back its international business for several months and plans to concentrate its future international RTC business on providing letters of credit and other fee-based services. The company will phase out conventional commercial lending overseas, Daniel G. Finney, a company spokesman, said.

"We'll not be making new loans," said Mr. Finney said, and existing ones will be allowed to run off the company's books as they are repaid. MNC may also sell some of its Latin American loan portfolio, he added.

MNC, the parent company of the state's largest bank, Maryland National, has been shrinking its foreign loan portfolio for years. At the end of last year, the company had $179.5 million in foreign loans, the smallest category in its then $16.5 billion loan portfolio.

As recently as 1986, MNC had $678.1 million in foreign loans outstanding, according to the company's 1990 annual report.

Mr. Finney said that MNC has had problems with credit losses on the Latin American loans but added that the international division wasn't a major contributor to the barrage of actual and projected loan losses that staggered the company last year. Those problems were mostly the fault of troubled loans to commercial real estate developers close to home.

That was true because MNC had so few foreign loans, rather than because its foreign loans performed better than real estate lending. Foreign loans have posted a higher percentage of net credit losses than any other category of MNC loans every year since 1987, according to the annual report.

MNC management announced May 1 that it would undertake a restructuring that would shrink the company's asset base to between $15 billion and $17 billion by the year's end.

The company had about $20 billion in assets at the end of March.

The restructured company will concentrate on serving its core Baltimore and Washington markets.

The restructuring is also designed to cut MNC's operating costs by up to 15 percent, said Mr. Finney, who said that other restructuring moves will be announced by the end of the year. Frank P. Bramble, the company's chief operating officer, said May 1 that most layoffs connected to the restructuring, which are expected to number in the hundreds, would come within 90 days.

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