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Offshore Banking Firm Denies Improprieties in Valencia Deal

April 03, 1985|JOHN O'DELL | Times Staff Writer

Credito del Peru Holding Corp., the offshore banking company that Monday saw $5.2 million of its funds seized by Valencia Bancorp of Santa Ana in a contract dispute, Tuesday denied any improprieties in its ill-fated bid to acquire Valencia Bank for $11 million in cash.

In a terse statement issued by Credito, executive John Partridge said the holding company "categorically denies that it has breached its acquisition agreement with Valencia Bancorp in any manner."

Credito's statement stopped short of promising a lawsuit to recover the money, but did say the holding company--which owns Banco de Credito del Peru of Lima--is discussing the situation with its attorneys.

Partridge, who has been Credito del Peru's chief negotiator in the Valencia acquisition, said through a spokesman that he would not comment further.

Valencia Bancorp said Monday that it had called off the acquisition by Credito because of an alleged breach of contract. Valencia then seized $5.2 million that the Cayman Islands holding company had deposited at Valencia Bank, to cover any damages that resulted from the aborted acquisition.

Word that the deal was canceled came as Valencia reported that it lost $5.7 million in 1984 after a $2-million loss in 1983. In addition, Valencia said it is attempting to resolve a $6.5 million "misappropriation" of funds from its trust department--a situation that could almost double the losses of the past two years.

The $5.2-million seized from Credito would go a long way toward resolving Valencia's financial woes: The bank needs to raise more than $10 million to offset its 1984 and 1983 losses and boost its capital to a level acceptable to the Federal Deposit Insurance Corp. The bank's ratio of capital to assets is 2.8%, far below the 7.5% ratio required by the FDIC.

But banking industry sources say it is not likely that Valencia will be able to put any of the Credito del Peru funds to immediate use because the money surely will be tied up by legal actions for months or even years to come.

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