Bankers Trust-Dharmala deal

Bankers Trust-Dharmala deal

WASHINGTON (Reuter): Bankers Trust New York Corp. said it settled lawsuits over derivatives dealings with PT Dharmala Sakti Sejahtera of Indonesia.

Dharmala lost US$69 million on interest rate swaps it entered with Bankers Trust in early 1994, but it refused to pay the bank, saying it had been misled.

In December, the commercial court of the English High Court of Justice in London ruled in favor of Bankers Trust but in November an Indonesian court ruled in favor of Dharmala. In Friday's settlement, the company agreed to drop both lawsuits and pay an undisclosed portion of the losses.

Bankers Trust had previously written off the money owed by Dharmala. The settlement will be considered a recovery to the bank's allowance for credit losses, a bank official said.

With Friday's settlement, the bank has now resolved nearly all the disputes that arose with its derivatives customers following the sharp rise in interest rates in 1994. Only a lawsuit filed by Procter & Gamble Co., which lost $195 million, remains ongoing. Lawyers for the bank are expected to file motions to dismiss in federal court in Cincinnati in April.