PIMCO Seeking $1 Billion to Buy Troubled Bank Assets

Pacific Investment Management Co., otherwise known as Pimco, is seeking at least $1 billion for a private fund to buy troubled bank assets, according to two people briefed on the plans. Pimco manages the world's largest mutual fund, and is often seen as among the leading fixed income fund companies. A Bloomberg report notes that "The Pimco Bravo fund, short for Bank Recapitalization and Value Opportunities, will acquire commercial and residential mortgage loans and other debt, according to a prospective investor who asked not to be named because the capital raising is private. Pimco plans to work with a loan servicer to renegotiate the terms of the acquired debt directly with creditors, the client said." The Basel Committee on Banking Supervision adopted new standards in September that will more the double the ratio of capital to risk that banks can carry. Pimco hopes to take advantage of these new rules by buying discounted assets from banks that are forced to sell. Pimco's institutional fund will target smaller lenders and community banks, and won't buy consumer debt such as credit-card and auto loans, the investor said. Mark Porterfield, a Pimco spokesman, declined to comment. Pimco, started in 1971 mainly as a U.S-oriented traditional bond shop, has expanded into emerging markets and hedge fund- style strategies.