Riggs Lost $34.4 Million, Hurt by Fines, Core Operations

[seemslikeadream]

By Terence O'Hara
Washington Post Staff Writer
Tuesday, August 10, 2004; Page E01


More than $42 million in unusual expenses were incurred during the quarter, including a $25 million federal fine in May for failing to properly monitor several high-risk embassy accounts to protect against money laundering.


The largest single realignment cost was a $7.9 million write-down of the value of Riggs's private jet, a 1998 Gulfstream V. The aircraft was acquired to be used in the service of Riggs's international business, though the company regularly paid for its largest shareholder and former chairman, Joe L. Allbritton, to use the aircraft on personal business. Riggs said the 14-passenger jet, considered among the top of the line in corporate aircraft, is under contract to be sold for $28.3 million.



Aside from the unusual expenses, Riggs's core operations were less profitable than they were a year ago. The company's net interest income, a key measure of the profitability of loans and other assets, declined by 11 percent. Riggs borrowed heavily from the Federal Home Loan Bank in the quarter to fund embassy deposit withdrawals; such borrowings are typically more expensive than paying depositors for the use of the money in checking accounts.

Riggs has said it had a total of about $1 billion in deposits from about 100 embassy customers at the beginning of the year. A source with knowledge of the matter, but who spoke on condition of anonymity because of the sensitivity of the information, said about half of that business has moved to other banks. But a quirk of timing, and the difficulties several embassy customers had in finding new banks this summer, resulted in the change having limited impact on Riggs's balance sheet. In particular, $500 million from Equatorial Guinea's oil extraction contracts was still sitting in Riggs vaults on June 30, even though the bank had formally ended the bank-client relationship in March.

more
http://www.washingtonpost.com/wp-dyn/articles/A52860-2004Aug9.html


more
WaPo: Allbritton Loses Riggs Bank (front page, day 3)
http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=102&topic_id=691609


no mention of Jonathan Bush AGAIN!