Banks accounting woes worsen.Puerto Rico's banking industry has become a regulatory mess, reports Reuters (Oct. 26, 2005). With investor confidence shaken by accusations of bad accounting at three top financial institutions, analysts view the island banking sector as ripe for consolidation: Doral Financial Corp., the island's No. 1 residential mortgage lender, disclosed that the U.S. Securities and Exchange Commission has changed an informal accounting probe into a formal one. First BanCorp
First BanCorp is a financial holding company located in San Juan, Puerto Rico, which offers a full range of financial services in Puerto Rico, US Virgin Islands, the British Virgin Islands, and , the No. 2 bank, and R&G Financial Corp. earlier in the month announced similar upgrades, which give the agency subpoena subpoena (səpē`nə) [Lat.,=under penalty], in law, an order to a witness to appear before a court. A subpoena ad testificandum [Lat. power. The San Juan-based companies, which pledged to cooperate with regulators, have also suffered turmoil at the top. Since August, each lost its chief financial officer, and Doral's and First BanCorp's chief executive officers quit. The companies have the same auditor, PricewaterhouseCoopers. "It's an embarrassing situation all the way around for Pricewaterhouse and the bank regulators," said Thomas Monaco, an analyst at Moors Moors, nomadic people of the northern shores of Africa, originally the inhabitants of Mauretania. They were chiefly of Berber and Arab stock. In the 8th cent. the Moors were converted to Islam and became fanatic Muslims. & Cabot Capital Markets in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of ; Investors have fled. Shares of Doral, First BanCorp and R&G have fallen a respective 82%, 64% and 77% from their 52-week highs last December and January, wiping See wipe. out US$6.2 billion of market value. The Philadelphia KBW KBW Kommunistischer Bund Westdeutschlands (Communist Union of West Germany) KBW Keefe, Bruyette and Woods, Inc. (investment firm) KBW Knowledge-Based Warfare Bank Index is down 6% this year. The companies are struggling with how to account for mortgage loan sales. The issue is whether transactions qualify under an accounting rule as "true sales," or must be classified as commercial loans. |
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