- 120 -
Nor did petitioner adduce any proof that the interest rate
on any of the loans at issue to Radcliffe and BOT that UnionBank
had funded87 afforded that bank an opportunity to earn a profit.
To the contrary, we have found as a fact that those loan transac-
tions did not provide Union Bank with such an opportunity.
An officer of Union Bank, Henry Yung, testified generally
that that bank tried to make a profit on its loans. However, he
did not testify specifically that Union Bank was trying to make a
profit on its loans to Radcliffe and BOT. In fact, he wrote the
March 3, 1986 letter to Patrick Kwok of Standard Chartered Bank
HK, an affiliate of Union Bank, in which he indicated that Union
Bank was losing money on the loans to Radcliffe and to BOT that
it had funded. That letter further stated that Union Bank was
losing money on those loans even when earnings from deposits that
were not connected with those loans also were taken into account
and that Union Bank nonetheless was willing to renew those loans
on terms that would allow it to break even on them. It appears
to us that Union Bank's willingness to renew on break-even terms
86(...continued)
solely because Union Bank was losing money on a 1.15 percent
spread.
87 The rate on the UB $570,000 pre-March 1984 loan, the UB
$570,000 renewed loan, the UB $325,000 loan, and the UB $800,000
Radcliffe loan was 1.5 percent in excess of Union Bank's LIBOR or
1 percent in excess of its prime rate or its reference rate. The
interest rate on the UB $1,300,000 loan and the UB $1,830,000
loan was 1.15 percent in excess of the interest rate on the
certificates of deposit that secured those loans.
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