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Hedge fund loss of $100M?
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October 14, 1998: 6:02 a.m. ET
BankAmerica estimates exposure to D.E. Shaw at $1B; 3Q earns due
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NEW YORK (CNNfn) - BankAmerica Corp., the nation's fifth largest bank, reportedly will disclose an estimated loss of about $100 million due to hedge fund activities when it reports its third-quarter earnings on Wednesday.
The San Francisco-based financial institution's overall exposure to the hedge fund, D.E. Shaw & Co., is estimated as large as $1 billion taking the form of either loans or credit lines, the New York Times reported.
The disclosure comes as commercial and investment banks increasingly divulge their once-secretive activities with hedge funds -- investment partnerships that use leverage in attempts to increase their returns. The funds have been the target of scrutiny since the near-collapse of well-known Long-Term Capital Management.
On top of the problems with hedge funds, U.S. companies during the third quarter have also had to contend with the financial turmoil of overseas markets. BankAmerica has already stated it has lost approximately $330 million in trading income to date in the third quarter.
BankAmerica will report its earnings Wednesday prior to the start of trading. First Call estimates call for the company to earn 90 cents per share for the quarter.
The hedge fund losses were first reported in the San Francisco Chronicle.
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BankAmerica
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