Reports are emerging that Italian officials looking into the collapse of Parmalat, Italy's largest food company, are investigating Bank of America's Milan branch manager.

The bank said earlier this year that its exposure in the Parmalat bankruptcy runs to millions of US dollars, and includes letters of credit (L/Cs).

Resignations

Bank of America's Milan branch manager Eros Francini is under investigation by Italian officials, according to the Bloomberg news agency. It says he is one of three Milanese bank executives to face questions from investigators.

The bank has apparently confirmed that three officials are under investigation but has not named them. Bloomberg however has reported that two corporate finance executives, Luis Moncada and Antonio Luzi, had resigned.

Collapse

Parmalat collapsed in December 2003 when the dairy giant revealed that Bank of America was not holding US$4.9 billion of its funds, as the Italian company had reported in the previous September.

Bank of America said in a regulatory filing in the following January that its total exposure to Parmalat was around US$274 million. In terms of L/Cs and direct loans, its exposure is US$244 million, of which US$121 million did not have collateral, the filing said.

Exposure

Bank of America in the fourth quarter of 2003 said it wrote off US$114 million and US$92 million of derivatives that was related to a single European credit. The bank has not confirmed the client to which the credit refers.

Several international banks are believed to have considerable exposure in the Parmalat affair. Bank of America was the first foreign bank to disclose its exposure. Seven of Italy's top banks have disclosed exposures to Parmalat.

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