More Banks Boost Reserves for Bad Loans

Several more U.S. banks made large additions to their loan-loss reserves Thursday in anticipation of losses on their loans to Third World borrowers.

American Express Bank Ltd., the international banking unit of American Express, added $600 million to its reserves for possible loan losses abroad, particularly in Latin America. As a result, the New York-based bank will record a large loss in the second quarter.

The parent company, however, expects to post a loss of only $50 million for the quarter because of earnings from other units, including its credit card and travelers’ check operations, the Shearson Lehman Bros. brokerage and IDS Financial Services.

PNC Financial Corp., parent of Pittsburgh National Bank, boosted its reserve by $110 million, cutting second-quarter profits by $66 million. Despite the loan loss provision, the company said it would be profitable in the quarter and it expects to earn about $100 million for the first six months of the year.

First Wachovia, based in Winston-Salem, N.C., set aside $50 million for future loan losses, $35 million of it earmarked for troubled developing country borrowers. The provision will lower second-quarter net income by $20 million but would not put the bank in the red for the quarter, the company said.

First Wisconsin National Bank said it was reserving $96 million in preparation for losses on its Latin debt portfolio, leading to a second-quarter loss of about $55 million. However, the company predicted it would show a profit for the year.