TOKYO, JULY 8 -- Nine major Japanese banks have agreed in principle to help BankAmerica Corp. recover from heavy losses, banking sources said today.
The sources said representatives of the nine banks were scheduled to meet tonight to discuss the matter. The group includes Mitsui, Sanwa, Sumitomo, Dai-Ichi Kangyo and Bank of Tokyo, they said.
Frank Newman, vice chairman of BankAmerica, made the request to 23 leading Japanese institutions during his visit to Tokyo last month. His visit followed a trip by Chairman A.W. Clausen, a former World Bank president.
The economic daily Nihon Keizai Shimbun said the nine banks have agreed to Newman's request that the banks purchase $250 million worth of subordinate capital notes to contribute to the establishment of smooth financial relations between Japan and the United States.
The paper said securities and insurance firms are also expected to accept $100 million worth of preferred stock. The requested sum will be part of a $1 billion capital increase planned by BankAmerica, the nation's second largest.
It will be the first case of capital cooperation with an American bank by a group of Japanese institutions, the newspaper said.
"We have yet to make a decision on the request," said a spokesman for Mitsui Bank. "It is hard for us to decide before terms for our cooperation are made known."
A spokesman for Bank of America, BankAmerica's major subsidiary, said "negotiations have been progressing." He said terms have been presented in separate negotiations with Japanese banks. He declined to disclose details.
BankAmerica suffered losses estimated at more than $350 billion as a result of its heavy exposure to Brazil and other Latin American debtors, financial sources said.
They said the bank has been under pressure from U.S. authorities to raise its equity.
The bank's decision to add $1 billion to its loan-loss reserves will make its recovery difficult, the sources said.
Kenichi Kamiya, chairman of the Federation of Bankers Associations and the head of Mitsui Bank, said earlier it would be difficult for the federation to tackle the BankAmerica request as a group.
The federation is a group of 87 banking institutions.