M&T's Wilmington Trust indicted in U.S. over loans

(Reuters) - Wilmington Trust Co has been indicted over its role in concealing problematic loans on its books from regulators after the financial crisis, joining four former executives who were previously charged, federal prosecutors said on Wednesday.

U.S. Attorney Charles Oberly in Delaware said Wilmington Trust, now part of Buffalo, New York-based M&T Bank Corp, was the first recipient of federal bailout money under the Troubled Asset Relief Program (TARP) to be indicted.

M&T was not charged in the new 19-count indictment, which accuses various defendants of making false statements in securities filings and to U.S. government agencies.

Oberly said the alleged criminal conduct in the indictment predated M&T’s May 2011 purchase of Wilmington, and related solely to Wilmington’s commercial banking operations.

A copy of the indictment was not immediately available. M&T did not respond to requests for comment.

Prosecutors accused the Wilmington defendants of having from October 2009 to November 2010 concealed the quantity of past-due loans on the company’s books, making its finances look better and helping it raise $273.9 million in a February 2010 stock offering.

In prior filings, prosecutors have said Wilmington at times underreported by more than $300 million the amount of loans at least 90 days past due.

Wilmington received $330 million from TARP.

Mounting losses from construction loans and commercial mortgages led to Wilmington’s November 2010 agreement to sell itself to M&T at a 46 percent discount to its market value, ending more than a century in business.

“I did not make the decision lightly to seek charges” against Wilmington, Oberly said in a statement.

“Wilmington Trust Corp had an obligation, to its shareholders and to the public, to accurately report the important financial metrics,” he said. “Difficult financial times may present significant business challenges, but they do not excuse anyone or any entity from complying with the law.”

Former Wilmington officers who have been charged include onetime president Robert Harra, chief financial officer David Gibson, controller Kevyn Rakowski and chief credit officer William North. All have pleaded not guilty, court records showed.

Reporting by Nate Raymond and Jonathan Stempel in New York