Zions Bancorporation, Utah's biggest lender, said the new Volcker Rule forces the company to get rid of some prohibited holdings at a cost of about $387 million.

The bank can no longer keep trust-preferred collateralized debt obligations (CDOs) issued by banks and insurers until they mature, the Salt Lake City-based firm said today in a statement. Other asset-backed CDOs are included in the non-cash charge, which Zions said may be bigger or smaller depending on how sales mandated by the Volcker Rule affect prices.

The cost is more than Zions earned for any calendar year since 2007, marring the turnaround engineered by Chief Executive Officer Harris Simmons. The bank has posted two profitable years after three straight losses starting in 2008 that were driven by soured real estate loans and charges tied to CDOs. The disclosure by Zions spurred speculation of similar writedowns at U.S. banks.

Continue Reading for Free

Register and gain access to:

  • Thought leadership on regulatory changes, economic trends, corporate success stories, and tactical solutions for treasurers, CFOs, risk managers, controllers, and other finance professionals
  • Informative weekly newsletter featuring news, analysis, real-world cas studies, and other critical content
  • Educational webcasts, white papers, and ebooks from industry thought leaders
  • Critical coverage of the employee benefits and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.