Citicorp Breaks Ranks

A banking giant makes a daring move to deal with Third World debt

Rumors of what Citicorp Chairman John Reed was about to say had already roiled stock and bond markets last week as the trim executive stepped up onto a rostrum in Manhattan. Soon the confirmation flashed around the world: the largest U.S. bank (1986 assets: $196.1 billion) had made an almost heretical break with the U.S. financial community's long-standing practices in handling its crushing burden of $62 billion in Third World debt. Reed declared that Citicorp intends to set aside, effective immediately, no less than $3 billion in additional reserves to cover loan losses on its $133 billion portfolio, bringing its total...