FleetBoston Financial Corp. held a conference call last week to help quell concerns among investors over falling share price, losses in Latin America and to dismiss numerous rumors circulating on Wall Street, including one that has the seventh-largest U.S. bank up for sale.
The conference call came hours after FleetBoston’s head of Latin American operations, Henrique de Campos Meirelles, announced his resignation and plan to run for political office in Brazil. FleetBoston Chief Executive Chad Gifford said nothing should be read into the resignation of Meirelles.
”Sometimes I know people are looking for issues behind such an instance. He has had this interest (to run for office) for some time,” said Gifford.
FleetBoston has suffered $2.3 billion in losses in Argentina since late last year because of the country’s debt default and currency devaluation. The bank recently cut off funds to Latin America because of the hit the bank took in Argentina.
A four-month slump in Brazil’s currency and bonds has investors worried about the risk FleetBoston faces in that country as well. The bank has 67 branches in Brazil and reported $2.4 billion of net cross-border claims – assets such as loans financed by deposits outside the country – as of June 30.
“Clearly there is risk in Brazil,” said Gifford. “I don’t believe you’re going to have a meltdown in the banking system as you did in Argentina. I don’t think that I’m going to convince anybody that there won’t be significant issues going forward, because I believe there will be a slowdown, but the differences in the financial system are so vast (compared to Argentina).”
Gifford said the bank has reduced its exposure to the Brazilian government from an estimated $1.5 billion to $1 billion.
During the conference call, Gifford expressed anger over the company’s credit problems both abroad in the U.S. He said loans to some U.S. companies got too big after Fleet Financial Inc. bought BankBoston Corp. in 1999.
In the second quarter, the bank lost $386 million tied to Argentina and loan defaults by telecommunications companies.
“Not withstanding the environment around us, mistakes were made in parts of the balance sheet, parts of the business over the past few years and changes have been, (and) are being made,” he said.
Gifford denied reports that Citigroup, among other large banks, is looking to buy FleetBoston.
During the conference call, Gifford reiterated that the bank still expects to earn 55 cents to 65 cents a share for each of the next two quarters.
Bloomberg News contributed to this report.
