Citicorp Chairman Walter B. Wriston today briskly rejected the view that commercial banks have reached a limit in lending to poor countries "and that other channels must be found in order to sustain the flows of capital to these countries."
In an address to the international monetary conference here, Wriston said that "this fear that banks have reached a limit will turn out to be wrong tomorrow, as its always has in the past."
The head of the holding company for Citibank cited figures showing that loans to less-developed countries outside of the Organization of Petroleum Exporting Countries amount to less than 5 percent of the bank's total assets. So long as these borrowers are judged creditworthy, commercial banks might well be able to have between 10 percent and 15 percent of their portfolio in such loans, Wriston said.
But Wriston's optimistic assessment was challenged both pubilicly and privately at these sessions. From the floor, U.S. Federal Reserve Governor Henry Qallich observed: "I could rent a car and drive it 200 kilometers an hour. It's true that nothing might happen. But it's also true that it would not be safe."
On the same panel with Wriston, Lord Eric Roll, chairman of S.G. Warburg and Co. Ltd., also took issue with Wriston, although at a press conference later, both men papered this over, saying "there are no real differences."
It is exposure problem, especially in the less-advanced nations, that concerns Wallich and Roll. But Wriston, whose bank deals primarily with the larger developing nations such as Brazil, was less worried. He said that unlike the others he had never feared a possible default by Brazil.