Bank of America said today its exposure to bankrupt Italian food giant Parmalat totalled $274 million at the end of 2003.
The disclosure by Bank of America, made in a regulatory filing, marks the first detailed breakdown of its financial exposure to Parmalat, which filed for bankruptcy on December 24th amid a multibillion-euro accounting scandal.
Bank of America, the third largest US bank, said its direct loans and letters of credit to Parmalat totalled $244 million, while derivative exposure totaled $30 million.
Derivatives are financial instruments derived from other assets, such as debt and equity securities, commodities, currencies and loans.
"Unfortunately, this bankruptcy will probably take a long time to be resolved, but we believe we are sufficiently positioned to deal with any material credit impact further down the road," Bank of America said in the filing.
On December 19th, Bank of America denied the existence of an account that Parmalat said it had with the bank. Parmalat had said the account held nearly €4 billion for a unit in the Cayman Islands.
Bank of America has sued Parmalat, alleging it was a victim of fraud. Bank of America had been one of Parmalat's lead bankers along with Citigroup Inc.
As of yesterday, Italian police had arrested 10 people in the Parmalat scandal, and prosecutors believe the hole in Parmalat's accounts could exceed €10 billion .