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Show y liyiiy rnyi Continental Bank Selling Its Most Valuable Assets By Bill Neikirk and Bill Barnhart Chicago Tribune A picture of a smaller Continental Illinois Corp., one far less intergrandiose than the national bank holding company of just a few months ago, is beginning to emerge on the second anniversary of the collapse of a much smaller institution, Penn Square Bank of Oklahoma City. In the naval vernacular familiar to top Continental management, the bank holding company is jettisoning cargo quickly to help it navigate out of the rough seas that began to swell when Penn Square Bank collapsed. The failure left Continental with more than $1 billion in mostly bad energy loans generated through Penn Square. The outcome of the shrinking may well be a banking company cut down 1983 size. The asto half its year-en- d sets up for sale arent just the bad loans. Conbank of tinentals highly regarded London merchant banking operation and its leasing subsidiary are known to be on the block. Using Emergency Loans While Continental shrinks, its principal asset. Continental Illinois National Bank and Trust Co. of Chicago, is making full use of the emergency fuel tanks at the Federal Reserve and 28 major banks. They agreed in May to extend Continental a 35.5 billion line of credit after a run on its deposits began in international money markets and precipitated a crisis at the bank. Fed data released Friday indicated Continental Bank had doubled its borrowing from the Federal Reserve System. The Federal Reserve Bank of Chicago had a total of $4 4 billion in loans on its books at the close of business Tuesday, up from $1.9 billion at the close of business June 27. Lowest Stock Price Although spokesmen for Continental and the Fed refused to comment on the amount of borrowings, most of the Chicago Fed loans were believed is to be to Continental Continental Corp. stock Friday fell 37 cents to $4.12, its lowest close in decades. CHICAGO Shareholder lawsuits arising from the failure of Penn Square Bank represent one of the biggest uncertainties in Continentals future. The defendants, and insurance carriers covering Continentals directors and officers against negligence, have steadfastly maintained that the demise of Continental did not result from corporate negligence or wrong- The Salt Lake Tribune v - - ' - Man. to Fit 10-- 6 SaL MaontoS 1WC. A1L YGUH MCttO MlDS 1113 EAST 2100 SOUTH SLC. lT. 64106 PRINTER SPECIALS ON MONEY MARKET ACCOUNTS OF 20,000 OR MORE FDIC III EPSON FX 100 EPSON RX 80 EPSON RX SOFT INSURED3 Checks per month UNION BANK EPSON FX 00 fine COMRTTER tTRACTORP COMPUTER IllP IF WE 61 MAIN OFFICE 6 South TOO Loot ST MARK'S BRANCH 1153 Emk 39UJ South Phan 363 2424 0 $1250.00 699.00 300.00 410.00 510.00 625.00 EPSON LQ 1500TRACTOR ' 0i 800.0Q D0N7 vfcv ... HAVE ' .vrstr s I? WELL FIND IT ? yi? r ' & warn a imp Hli-po- A banking regulator in Washington said he expected a long-tersolution to Continentals problems to be unveiled by the end of July. In the rt meantime, he said. Continentals to sell assets and shrink is well under way, with assets already down to $35 billion. . The official, who asked anonymity, said, It is desirable for the bank to Sell assets. It is done with the blessing of the regulators. Cash Flow Troubles For one thing, he said, the asset sales improve Continentals capital base and reduce its need for buying short-terfunds in the money markets. The sales also raise cash. Continental has suspended common-stoc- k dividend payments, but it must still service its debt with semiannual interest payments. Also, on Sept 4, Continental Illinois Overseas Finance Corp. must redeem $100 million in 14 percent notes guaranteed by the holding company. Unlike the liabilities of the bank, chiefly deposits, the liabilities of the holding company havent been protected by the Federal Deposit Insurance Corp. Banking regulators arent ruling out the possibility of merging troubled Continental into a healthier bank, and they wont say a strategy is the only answer. There are no merger partners on the horizon, though, and the prospects for a merger continue to grow dimmer in the banking community. Cautious About Buying Security Pacific Corp. chairman Richard Flamson said in London last week he had offered to buy Continental Illinois Ltd., the London merchant banking unit, but denied any interest in acquiring Continental Bank. Flam-son- s attitude seemed typical of other opbankers, who see market-growt- h portunities in some of Continentals operations but dont want to take too big of a bite. Although selling profitable operations will lighten Continentals load, the disposition of questionable or assets remains the m i i ef-io- m 'ffy'UcCyfaTiuf faucffyucCs toughest problem. Those assets, which according to some reports total nearly $4 billion, include loans that arent paying interest or have been rescheduled to meet debtors needs. Unless those assets are written off at the expense of current shareholders, Continental will continue to flounder. One scheme being discussed calls for private investors to buy the bad loans in the form of a newly chartered bank with substantial support from the government Court Battles A second major problem that has blunted the chances for a merger rears its head again Wednesday. Attorneys for Continental shareholders and for the bank and numerous present and former Continental officials will be back in court before U.S. District Judge John F. Grady in Chicago. A First Interstate Bank simple interest loan can help you turn these pictures into reality. y For an automobile or recreational vehicle loan; a loan for that special vacation; a college education; a home improvement loan for that growing family or a home equity loan, see the professionals at First Interstate Bank. We can tailor a loan to fit your specific needs. Stop by any office of First Interstate Bank and see how one of our simple interest loans can help you add a picture to your album. Without advertising, you wouldn't know. IMAt Mousat LINOtll 13B4 iSn SDFSHDR. doing. Attorneys for shareholders in the suits say the case is so strong against Continental and the individual defendants that defense attorneys should be controlled by the court, lest they squander Continentals assets. . Sunday, July 15, get-awa- First Unterstate Bank First Interstate Bank of Utah, N A A member of the First Interstate system with assets Of mors than 644 bUon. Member FDfC Oio 1964 bw ot the 0tympc w |