Sunday, March 16, 2003
Terremark woes not impacting Ocean Bank (Banco Plaza Ve), yet
Posted by click at 3:04 AM
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US news
From the March 7, 2003 print edition
Jim Freer
For more than a year, watchful eyes in the South Florida banking community have wondered whether the problems of Terremark Worldwide (Amex: TWW) could spill over on its primary lender, Ocean Bank.
Executives of Ocean Bank, the largest commercial bank based in South Florida, did not return phone calls this week.
But on Monday, the Federal Deposit Insurance Corp. released data that indicates an answer of "not as of Dec. 31."
That data is in Ocean Bank's year-end Call Report to the FDIC, the most-detailed information available on the privately held bank whose owners are based in Venezuela.
The report shows that Ocean Bank continues to have an alarmingly high number of nonperforming or problem loans, but that income from other loans has enabled the bank to continue to post solid profits.
Ocean Bank's major business is commercial real estate lending to clients including developers of offices and condominiums in South Florida.
The bank's commercial loan clients include Miami-based Terremark, owner/operator of the NAP of the Americas, the world's fifth tier-1 network access point.
The NAP is a high-speed electronic interchange where data is transferred from one major carrier to another. It occupies the second floor of the Technology Center of the Americas building under a 20-year lease. Its business has suffered in the telecom industry's meltdown.
Ocean Bank's 2002 net income was $45.5 million, for a 1.1 percent return on year-end assets of $4.1 billion. That gave the bank an ROA above the 1 percent that is the banking industry's standard for strong profits.
Ocean opened in December 1982 and has reported a profit for each of the 20 years it has been in business.
Seeds of a future income dip
But the FDIC's new report on Ocean Bank included some numbers that often indicate the prospect of a future drop in income for a bank.
The bank closed 2002 with $98.4 million in loans that are nonperforming – those that are 90 days more delinquent and those that no longer accrue interest.
Ocean Bank also had $1.1 million in real estate owned (REO) property. That's basically properties taken in foreclosure.
The $99.5 million total gave Ocean Bank a 2.4 percent ratio on nonperforming loans and REO to total assets.
The national average for banks and savings & loans was 0.9 percent on Dec. 31, according to the FDIC.
Ocean Bank's ratio was slightly higher than 1 percent for several quarters until the quarter ended June 30 – when it rose above 2 percent.
Of Ocean Bank's nonperforming loans at the end of last year, $97.7 million were in nonaccrual status. That category traditionally has the highest prospects for charge-offs or writedowns.
And a look at Ocean Bank's data, which includes a level of reserves that is strong by most standards, leads to questions about whether and when the bank might have to take a hit on problem loans and about how such a step could impact its balance sheet.
Linda Townsend, senior regulator for South Florida for the state government agency that is the primary regulator of Ocean Bank, said she and her staff are monitoring the bank, but not to any greater extent than they watch other banks with large amounts of nonperforming loans.
"Ocean Bank has shown a history of being very prudent in adding to its reserves and, when necessary in charging off loans," said Townsend, bureau chief for South Florida in the Florida Department of Financial Services' Bureau of Financial Institutions.
Townsend said Ocean Bank is among South Florida banks whose problem loans have grown due to the economic slump that is impacting real estate markets and due to problems in Latin America that are impacting many businesses in South Florida.
"There are indications that they [Ocean Bank] are managing it well," she said.
Townsend said her agency is not permitted to identify any nonperforming loans at Ocean Bank or other banks.
Ocean Bank's Call Report shows that during 2002 it added $47 million to its reserves for potential loan losses.
Reserve ratio draws attention
The bank had $84.9 million in reserves at year-end for a ratio of 90 percent to its nonperforming loans.
That ratio is high, considering that many banks whose problem loans have been growing have reserve ratios in the 50 percent to 60 percent range.
Townsend said she cannot comment on reserve ratios of particular banks.
"Speaking generally, you would be concerned about a bank even with a high percentage of reserves if a lot of the nonperformers are in auto loans," she said.
In Ocean Bank's case, she said, the portfolio is heavily laden with real estate, which regulators generally regard as strong collateral.
Research, including a review of Ocean Bank's Web site, shows no instances in which the bank has publicly identified borrowers for any of its loans in non-performing status.
But bankers and other business people are monitoring Ocean Bank's loans to Terremark, which operates at the Technology Center with the NAP.
In a filing with the SEC on Feb. 14, Terremark said it is negotiating a restructuring of its
$44 million in debt owed to Ocean Bank.
Terremark said it owes $1 million in unpaid interest on that credit.
In the filing, Terremark said it had obtained a letter from Ocean Bank waiving any current default under its credit agreement resulting from past due interest or from $22.6 million in liens that creditors have on the TECOTA building.
The waiver from Ocean Bank is through March 31.
That deadline is raising questions about whether and when the bank might take charges on its Terremark loan or on other problem loans.
Townsend said her agency has no indications that any such actions are pending.
Ocean Bank's Call Report for Dec. 31 shows $50.1 million in commercial and industrial loans that are in nonaccrual status and
$29.3 million in construction and land development loans in that status.
Precursor to a writedown?
If a bank charges off or writes down a large total of nonaccrual loans, it subtracts the amount from its loan reserves.
In quarters when a bank takes such action, it usually adds money to those reserves – often under orders from regulators.
Money a bank adds to reserves is reported as an expense, which reduces a quarter's income and in some cases can lead to a quarterly loss.
Ken Thomas, a Miami banking consultant, said he does not know which of Ocean Bank's loans are in nonaccrual status.
But he said that when large real estate loans are written down, a bank usually gains recovery on a large amount within several quarters, often through sales of property.
Thus, he said, Ocean Bank's current level of reserves might enable it to cover a large share of any writedowns.
Thomas said he feels that Ocean Bank has "strong management, and a good track record including managing of their portfolio."
At the end of last year, Ocean Bank had $327 million in Tier I capital, a figure similar to equity. Its ratio of that capital to assets was 7.92 percent – almost twice what regulators require for adequate capitalization.
But Ocean Bank's nonperforming loans are a main reason the bank is rated only in the high "adequate" range by Bauer Financial of Coral Gables.
For the quarter ended Sept. 30, Ocean Bank has a three-star rating from Bauer Financial, which rates banks on a one to five scale, with five being the highest, based on factors that include profitability, capital and loan delinquencies.
E-mail contributing writer Jim Freer at jimfreer@aol.com.
The Discarded Kids of Brazil
Posted by click at 2:57 AM
in
brazil
www.brazzil.com
March 2003
What would a UK Social Services department make of all this?
I guess all the children would be immediately rounded up
and shunted off into care, and there would be calls for a
Royal Commission to be set up…but we are in Brazil.
According to Unicef, there are from seven to eight million
kids in worse shape, living or working on the streets.
Mark Ereira
Venezuela Oil At 3 Million Barrels a Day
www.guardian.co.uk
Sunday March 16, 2003 1:20 AM
CARACAS, Venezuela (AP) - Venezuela's crude oil production has surpassed 3 million barrels a day - approaching levels that made it the world's fifth-largest exporter before a crippling national strike, the state oil monopoly's president said Saturday.
But government officials say work still needs to be done before the industry fully recovers from the failed two-month walkout aimed at forcing President Hugo Chavez to resign or call early elections.
The strike, which ended last month, was strongest in the oil industry, the source of half of government revenues and 80 percent of export earnings.
``The task now that we have reached that level is to maintain and stabilize production,'' said Ali Rodriguez, president of Petroleos de Venezuela S.A.
Oil executives fired for participating in the strike dispute the government figures, saying daily production is at 2.1 million barrels.
Before the strike, the South American country was a main exporter to the United States, producing 3.2 million barrels a day. Oil production dropped to 200,000 barrels a day at the height of the walkout, costing the country $6 billion. Several refineries also were damaged by being shut down for so long.
Energy and Mines Minister Rafael Ramirez said Friday that Venezuela reached an agreement with the Organization of Petroleum Exporting Countries allowing it to produce above its crude oil output quota of 2.8 million barrels a day to make up for the lost revenue. Venezuela is an OPEC member.
EYE ON THE GULF: Could U.N. use military force on U.S.? Americans urge invoking obscure convention to halt 'aggression'
Posted by click at 2:40 AM
in
iraq
worldnetdaily.com
Posted: March 15, 2003
1:00 a.m. Eastern
By Art Moore
© 2003 WorldNetDaily.com
Could the U.N. use military force to prevent the United States and Britain from waging war on Iraq without a Security Council mandate?
Some anti-war groups are urging the world body to invoke a little-known convention that allows the General Assembly to step in when the Security Council is at an impasse in the face of a "threat to the peace, breach of the peace or act of aggression."
The willingness by the U.S. and Britain to go to war with Iraq without Security Council authorization is the kind of threat the U.N. had in mind when it passed Resolution 377 in 1950, said Michael Ratner, president of the Center for Constitutional Rights, a human-rights group in New York City.
In a position paper, Ratner wrote that by invoking the resolution, called "Uniting for Peace," the "General Assembly can meet within 24 hours to consider such a matter, and can recommend collective measures to U.N. members including the use of armed forces to 'maintain or restore international peace and security.'"
The U.N. taking military action against the U.S.?
"It would be very difficult to say what that means," said Ratner in an interview with WorldNetDaily, emphasizing that he did not believe the situation would evolve to that "extreme."
"I don't consider that within the framework I'm talking about," he said.
Shonna Carter, a publicist for Ratner's group, said she believed it would be legitimate for the U.N. to use military force to stop "U.S. aggression."
"But I doubt it would happen," she said. "I don't think that as part of Uniting for Peace they would include military action, but that would have to be something those countries agreed on. …"
Steve Sawyer, spokesman for Greenpeace in New Zealand – which has joined Ratner's group in the campaign – told WND he was not aware of the U.N. being able to use force under any circumstances.
Ratner explained that Resolution 377 would enable the General Assembly to declare that the U.S. cannot take military action against Iraq without the explicit authority of the Security Council. The assembly also could mandate that the inspection regime be allowed to "complete its work."
"It seems unlikely that the United States and Britain would ignore such a measure," Ratner said in his paper. "A vote by the majority of countries in the world, particularly if it were almost unanimous, would make the unilateral rush to war more difficult."
Uniting for Peace can be invoked either by seven members of the Security Council or by a majority of the members of the General Assembly, he said.
'Ways to make U.N. more important'
Ratner, who also teaches at the Columbia University Law School, told WND that the idea of invoking the resolution "came up when I started thinking about the fact that we could get into a situation where the U.S. may go to war without a Security Council resolution or with a veto."
He had two of his students at the law school research the resolution and now has sent out the word to every U.N. mission in New York.
In addition, about 12 missions a day are being visited by campaigners, he said, and the response has been generally very positive.
He expects there to be support from the 116 countries in the non-aligned movement, who are "already saying inspectors should be given more time."
Greenpeace's involvement has greatly expanded the campaign's reach, he said, since "we're just a small human-rights litigation organization."
"I've done a lot of work with international law and with the U.N.," he said, "and we're always interested in figuring out ways to make the U.N. more important."
Sedition?
A circular e-mail letter promoting the campaign said in the first paragraph that "if Iraq is invaded, it would empower the General Assembly to restore peace, including an authorization to use military action to accomplish this, if necessary."
The letter includes Ratner's name and e-mail address as a contact, but he says he did not send out that particular version, which included the line about the U.N. using military action.
A political science professor at the University of Michigan who forwarded the letter to colleagues, added a note above the text, obtained by WND, that said: "Below you will find an excellent and urgently needed proposal for stopping the war before it starts from the Center for Constitutional Rights. …"
"Please make this major peace action a high priority and forward this message to others," said Susan Wright, who indicated she is with the university's Institute for Research on Women and Gender.
Is Wright essentially urging foreign countries to be willing to take military action against her own country?
"I wouldn't say it's necessarily sedition," said Ratner. "Advocacy is one thing, having the means to carry it out is another. It's not something I would ever recommend."
Art Moore is a news editor with WorldNetDaily.com.
EYE ON THE GULF: U.S. to wage war without U.N. OK? Amid diplomatic setbacks, Bush, Blair willing to go ahead under prior mandate
Posted by click at 2:30 AM
worldnetdaily.com
Posted: March 13, 2003
5:00 p.m. Eastern
© 2003 WorldNetDaily.com
Amid new diplomatic setbacks, the United States said today it might go ahead with military action against Iraq without U.N. Security Council authorization.
The U.S. is seeking Security Council support for a proposed resolution – co-sponsored by Britain and Spain – that would give Iraq a few more days to comply with demands for disarmament, but Secretary of State Colin Powell said the new initiative might be pulled.
In that event, said Powell, the U.S. would go ahead with military action under the authority of previous resolutions. British Prime Minister Tony Blair argued today that the most recent mandate, resolution 1441, already gives authority to use force.
"The options remain, go for a vote and see what members say or not go for a vote," Powell told a U.S. congressional committee.
Powell said "all the options that you can imagine are before us and [we will] be examining them today, tomorrow and into the weekend."
Meanwhile, U.N. Secretary-General Kofi Annan hinted this morning that he might entertain a proposal from President Luiz Inacio Lula da Silva of Brazil to convene a summit of world leaders in an attempt to head off war.
"President Lula sent me a message through his foreign minister on Monday night suggesting that maybe we try and bring together a group of world leaders, organize a summit with a group of leaders who are also searching for a compromise to get us out of this crisis," said Annan, in a brief session with reporters upon his return to U.N. headquarters.
The U.N. chief added that it would include "not necessarily council members, but interested heads of state in the world who are not on the council but are genuinely concerned to find a way out."
President Bush has stated he is willing to launch a war without U.N. backing, but his closest ally, British Prime Minister Tony Blair, facing strong opposition from his Labor Party, is seeking a compromise.
However, today France rejected Blair's proposal, which would set out six conditions for Iraq's disarmament.
French Foreign Minister, Dominique de Villepin insisted that Iraq must be given a realistic deadline to get rid of its weapons of mass destruction.
"It's not about giving a few more days to Iraq before resorting to force but about resolutely advancing through peaceful disarmament," de Villepin said in a statement.
British Foreign Secretary Jack Straw retorted that the French minister's "extraordinary" statement made a peaceful resolution of the crisis "more difficult," and vowed to continue seeking support for the tests.
"What I however find extraordinary is that without even proper consideration the French Government decided they will reject these proposals adding to the statement that whatever the circumstances France will vote no," he said.
Straw said resolution 1441 placed obligations not only on Saddam Hussein, but on the Security Council members, "to see through the process of disarmament," hopefully by peaceful means, but by force if Iraq chose not to comply.
"What we are seeking to do is by this suggestion, these proposals of these tests, to ensure that even at this late stage there is a means by which Saddam can show reasonably that he is coming in to compliance with his obligations going back to 1991," Straw said.
In his briefing today, White House spokesman Ari Fleischer criticized France for rejecting "the logic of ultimatums."
"France also looked at the British proposal, and they rejected it before Iraq rejected it," he said. "If that isn't an unreasonable veto, what is? So we look at what France is doing, and we wish they were doing otherwise."
Britain has offered to drop one of its tests, a demand for Hussein to appear on Iraqi television and renounce past illegal weapons programs. British diplomats say they also are willing to substantially extend the proposed resolution's March 17 ultimatum, but the U.S. objected to anything more than a "very, very" modest extension.