Copyright 1999 The Buffalo News
The Buffalo News
January 27, 1999, Wednesday, CITY EDITION
SECTION: BUSINESS, Pg. 7A-
LENGTH: 386 words
HEADLINE:
IRS RULING ALLOWS MARINE'S PARENT TO BOOST INCOME
BYLINE: CHET BRIDGER; News Business Reporter
BODY:
HSBC Americas, the parent company of
Marine Midland Bank, received a favorable IRS ruling on foreign
tax credits adding $ 33 million of pre-tax income
during the fourth quarter.
The windfall helped the bank post a $ 159
million quarterly profit, a 32 percent increase from the same quarter in 1997.
HSBC Americas also announced Tuesday a net income for
1998 of $ 527 million, which was 12 percent higher than 1997. The corporation
reached a settlement with the IRS on Brazilian tax credits disallowed during the
1980s. The credits stem from Marine Midland's long defunct effort to become a
major lender to Brazil.
Marine Midland's loans to the Brazilian
government, Brazilian Central Bank and other Brazilian banks totaled in the
"hundreds of millions" in the 1980s, said HSBC Americas Chief Financial Officer
Robert M. Butcher.
The IRS initially denied Marine Midland Bank foreign
tax credits for its tax payments in Brazil, but the bank won a favorable ruling
from the U.S. government agency in 1998.
"We've pursued this rather
diligently . . . This represents a significant one-time settlement from a prior
period," Butcher said.
The bank now has only a minor loan balance in
Brazil.
In addition to the tax credits, the bank's 1998 financial
numbers also benefited from a $ 28 million sale of portions of its credit card
portfolio.
HSBC Americas net interest income, the traditional foundation
of bank earnings, dropped slightly from $ 1.173 billion in 1997 to $ 1.165
billion in 1998.
HSBC Americas loans totaled $ 24 billion at the end of
December, up 11 percent from $ 21.6 billion at the end of 1997. Marine Midland
Bank recently acquired $ 1.7 billion of commercial loans from Hong Kong and
Shanghai Bank branches in New York City and Chicago.
The HSBC Group's
U.S. commercial banking activities are now consolidated through Marine Midland
Bank. The Buffalo-based bank will change its name to HSBC Bank USA later this
year.
The bank also continued improving several key operating standards
in 1998, including a return on equity rising from 22.93 percent to 24.93 percent
and a cost-to-income ratio dropping from 51 percent to 48 percent.
Those
numbers also benefited from the tax credits. Marine Midland has one of the best
cost-to-income ratios of any U.S. regional bank.
LOAD-DATE: January 29, 1999 
