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/ 83.5.228.* / 2009-07-17 15:55
Last month, AIG said in a regulatory filing that it may be at risk for losses for “significantly longer than anticipated” if the banks don’t terminate their swaps.
‘Plea for Help’
“Given the size of the credit exposure, a decline in the fair value of this portfolio could have a material adverse effect on AIG’s consolidated results,” the company said in the June 29 filing.
The Securities and Exchange Commission asked for AIG to add the disclosure to the insurer’s “risk factors,” Herr said. The action wasn’t prompted by any change in the securities backed by the swaps, he said.
Royal Bank of Scotland Group Plc, Banco Santander SA, Danske Bank A/S, Rabobank Group NV and Credit Agricole SA’s Calyon are also among banks which purchased the swaps, AIG said in a presentation in February pleading for its latest bailout. The banks could be forced to raise $10 billion in capital if AIG were allowed to fail, according to the document.
Santander said through a spokesperson that the bank’s risk of an AIG failure is insignificant and fully collateralized. Calyon declined to comment. Representatives of the other lenders didn’t immediately return messages seeking comment.