O & Y was once ranked the world's largest property developer before it succumbed to a property market glut and global debts of US$10.9 billion in 1992.

Analysts were asking themselves and the bank, does yesterday's news mean there are going to be nice write backs ahead in this and next year's financial results. Of the total exposure to the failed property giant Hang Seng Bank reported US$100 million was attributable to its books.

The resolution of difficulties at Canary Wharf does not directly affect HSBC, nor for that matter does it directly affect Hang Seng Bank. The group in the past has divulged its only overall exposure to the development was a bit more than US$9 million.

From the analysts spoken to yesterday and of course the bank which could make no comment, that was as far as it went on the subject of write backs.

The sale of Canary Wharf has to be good news for any remaining obligations written off at HSBC in the past. As the bank in general makes no comment on individual cases when it comes to anything linked to customers, let alone customers with apparent bad debts it is difficult to ascertain what the knock on effect will be of yesterday's announcement for what remains of the old Olympia and York.

HSBC was the leader of a US$2.5 billion jumbo loan to Olympia and York. The jumbo loan was granted against security in the form of controlling stakes in O & Y's two publicly listed companies, Gulf Canada Resources and Abitibi-Price. Had the assets been seized on completion of negotiations between creditors and the Canadian firm, HSBC would effectively - as part of the syndicate - hold a 24.6 per cent stake in Abitibi-Price and a 21.3 per cent stake in Gulf Canada.

It was reported in February 1995 that the market value of the syndicate's controlling stakes is currently C$752.9 million (about HK$4.2 billion) for Abitibi-Price and C$411 million for Gulf Canada Resources.

Taken together, plus a 25 per cent premium for the controlling shareholdings, the total market valuation for the two companies is C$1.45 billion - just 46 per cent of the original US$2.5 billion.

When announcing interims in August 1992 the bank made a US$187.5 million provision against Olympia and York losses, representing 25 per cent of its original loan.

In March 1993 charges for bad and doubtful debts more than doubled over the previous year from GBP502 million to GBP1.18 billion (about US$1.7 billion). Much of this, nearly half of the increase, came from the Midland acquisition and much of the remainder was related to Olympia & York. Total provisions outstanding jumped from 3.6 per cent to 5.4 per cent of the group's gross lending, or GBP5.37 billion (about US$8 billion) with specific provisions against exposure to Olympia & York totalling US$450 million for the year, equivalent to 60 per cent of the HSBC group's exposure of $757.7 million.

This $450 million represented provision against the collateral shortfall on the Gulf Canada and Abitibi-Price holdings.

By the interim report for the first half of 1993, chairman Sir William Purves told analysts the previous year's provision for Olympia & York remained in place and was not increased.

Now more than two years later the prospect of some kind of benefit to the group's profit and loss account either in 1995 or in 1996 looks greater than at any time since the fatal day on which O & Y began making headlines on its potential collapse as opposed to its potential developments and building projects.

It has been a general complaint among analysts following the bank that having gone to full disclosure of its accounts after the takeover of Midland Bank forecasters of profit were no better off as profitability could surge or contract according to the way the bank felt towards bad and doubtful debt provisions.

Now that the bank looks to be approaching a tie when it can write back provisions, having sustained a long period of writing down potential losses, analysts are no better placed to work out their profit forecasts.