New England Bank Eyes $1.2-Billion Loss

BOSTON —  Bank of New England Corp., a major Northeastern bank whose earnings have been whacked by the region’s weakening real estate market, said today that it expects to post a loss of about $1.2 billion in the fourth quarter, bringing its loss for the full year to $1.05 billion.

The nation’s 15th-largest bank said it will take a $1.5-billion charge for the fourth quarter to cover credit losses, bringing its total reserve to cover possible losses to $1.65 billion.

The Boston-based bank also announced plans to sell $6 billion in such assets as credit card receivables, commercial loans and leases. It said it has total assets of $29 billion.

The once-mighty Massachusetts bank has been facing difficulties because of its significant exposure to New England’s weak property markets.

Bank of New England had been one of the fastest-growing lenders to the Northeastern commercial real estate market.

When the region’s economic growth slowed, demand for real estate, particularly commercial property, fell sharply. Consequently, developers have had troubles paying off their loans.

The stock fell sharply on the news, declining 87.5 cents to $3.375, a drop of 20%. The bank’s stock value has dived in recent times because of its woes. Last year, Bank of New England stock traded at a high of $24.875.

Bank of New England said total nonperforming assets--primarily real estate loans--are expected to be about $2.25 billion, including more than $500 million of loans on which interest is being paid.

It said it plans to merge its eastern Massachusetts banks to form a single bank, based in Boston, with assets of $18 billion.

The bank said it will continue to work closely with the staff of the comptroller of the currency and the Federal Reserve Board and expects to enter into consent orders to improve the bank’s operations, including asset quality, capital and management.