Business Notes BANKING

* Major U.S. banks have tried to prepare for the day when they would have to acknowledge the hopelessness of collecting most of their troubled loans to developing countries. Last week that process gave way to a rush of reality as three major banking companies set aside funds to bolster their loan-loss reserves, a move that will give them stiff deficits now but help insulate them from defaults in the future. Manufacturers Hanover added $950 million to its reserves, Chase Manhattan $1.15 billion, and J.P. Morgan $2 billion. To shore up its finances, Manny Hanny also agreed to sell CIT Group, its corporate- finance subsidiary, to Japan's Dai-Ichi Kangyo Bank for $1.3 billion.

The reason for the move: pressure from the Bush Administration's debt- reduction plan. A Sept. 13 agreement to ease Mexico's debt gives banks the choice of lending new money to the country or accepting a 35% cut in the value of their outstanding loans.