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Wall Sees Foreign Interest in Troubled S&Ls

October 04, 1989|GREG JOHNSON | Times Staff Writer

SAN DIEGO — More than a dozen foreign investors are interested in acquiring part or all of some thrifts that will probably fail to meet the stricter capital standards to be instituted in 1991, M. Danny Wall, director of the Office of Thrift Supervision, said Tuesday.

Some of the investors from Japan, Canada and elsewhere "are just kicking the tires while others are looking at other levels," Wall said at a news conference at a regional meeting here of the newly created federal Office of Thrift Supervision.

S&Ls that will have only "marginal" problems meeting the tougher capital rules--imposed by the savings and loan bailout law passed by Congress earlier this year--are "getting a very significant amount of interest from Asia and the Pacific Rim," Wall said.

Executives of some American S&Ls are searching out foreign investors, he added. One "marginally" troubled thrift outside of California has "gone out and found a Japanese investor," Wall said. The institution hopes to receive a cash infusion from the investor and then acquire other troubled institutions, Wall said.

Two Factors

That Japanese investor reportedly anticipates a "flood of interest from Japan" in American S&Ls if its deal is completed.

Japanese investors are driven by two factors, Wall said. They view S&Ls as offering returns that are "probably better than they're going to get in their own market. And they see a public policy or public relations benefit (from) helping us solve our problem. They're putting our dollars to work in our country."

Wall said he senses no "animosity or rejection" toward the foreign investors by U.S. companies, largely because "there's a clear recognition that we have a problem. We need to get more capital and they're going to invest dollars, not Canadian dollars or yen."

"They're Asian investors," he added, "but they're using American managers."

Regulators pay special attention to foreign bidders for failed or failing institutions because "we are not familiar with their companies, we are not familiar with their people," Wall said.

California Attractive

So far, foreign firms that are expressing interest in acquiring S&Ls "tend not to be financial institutions," Wall said. "They tend to be trading companies and industrials."

California has special attractions for both foreign and U.S. companies "because it's a very active, very big market. There are more attractions here because there are more large institutions, more customers and more deposits."

Nationwide, Wall said, troubled thrifts have made headway in bolstering capital.

At the end of the first quarter, 165 institutions were known to have tangible capital-to-asset ratios of between 1.5% and 3%, Wall said. At the end of the second quarter, 80 of those institutions had boosted their ratios to 3% or higher. The bailout law requires all U.S. thrifts to reach the 3% tangible capital level by 1995.

Regulators have identified 263 S&Ls nationwide as "insolvent institutions that have to be dealt with," Wall said. As many as 200 additional institutions are expected to fall short of capital requirements in coming years, he added.

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