(12-09) 09:14 PST BUENOS AIRES, Argentina (AP) —

Hugo Chavez and six other Latin American leaders are launching a regional development bank Sunday that the Venezuelan leader is touting as South America’s answer to U.S.-influenced international lenders.

With startup capital expected at up to $7 billion, backers say the Banco del Sur, or Bank of the South, will offer Latin American countries loans with fewer strings attached than those proffered by the World Bank, the International Monetary Fund or the Inter-American Development Bank.

“The Bank of the South is a strategy … aimed at freeing us from the chains of dependence and underdevelopment,” Chavez said upon arriving Sunday in the Argentine capital for the signing ceremony.

The bank is one of several far-reaching proposals under Chavez’s ambitious call to unite a bloc of Latin American countries in a “confederation of republics.” His vision also includes a transcontinental natural gas pipeline and trade alliances.

Critics note much remains to be determined about how the bank will operate. They say it might turn out to be a largely symbolic project used by Chavez to spread his oil-financed influence.

But others call the bank a bold stroke for Latin America’s financial independence.

“What you had in the past decade was the collapse of a very powerful creditor’s cartel headed by the IMF,” said Mark Weisbrot of the Washington-based Center for Economic and Policy Research. “This is the first step in creating an alternative.”

Finance ministers of Brazil, Venezuela, Bolivia, Uruguay, Paraguay, Argentina and Ecuador will sit on the bank’s board. Officials say it will dispense loans for projects ranging from road-building to anti-poverty programs and regional integration plans such as cross-border rail lines.

Rodolfo Sanz, a Venezuelan state bank official, said capitalization is expected between $5 billion and $7 billion Д depending on final pledges. Venezuelan officials say loans will be issued at interest rates similar to other international lenders.

“The bank is not against anything or anyone. It is in favor of the people of South America,” Venezuelan Finance Minister Rodrigo Cabezas said when Brazil, the largest economy in South American, committed to joining the enterprise.

He said the bank will seek to replace “traditional functions of the World Bank and International Monetary Fund in the region and their obsolete operating statutes.”

The bank will be headquartered in Caracas, with Bolivian and Argentine branches.

Augusto de la Torre, World Bank chief economist for Latin America, said the bank is welcome.

“It’s a very interesting initiative which I think expresses the desire to find stronger cooperation between Latin American governments,” he told The Associated Press in a recent interview. “As far as the World Bank is concerned, this new initiative is not perceived as a competitor.”

IMF-watcher Paul Blustein at Washington’s Brookings Institution said the project highlights Latin America’s yearning for greater autonomy after decades of sporadic financial crises and imposed austerity measures Д such as IMF missteps ahead of Argentina’s 2002 economic meltdown.

“It’s really emblematic of how Latin America has become disillusioned with the model that the IMF and the World Bank and the U.S. Treasury promotes Д the so-called Washington consensus,” he said.

But he noted the IMF and World Bank have decades of know-how.

“I’m not so sure this institution is going to be any more successful,” he said.

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Associated Press writer Ian James in Caracas, Venezuela contributed to this report.

NEW YORK: KKR Financial Holdings, Kohlberg Kravis Robertss only publicly traded fixed-income fund, has delayed repaying debt for a second time in six months after failing to find buyers for commercial paper backed by mortgages.

Lenders to the fund agreed to the delay as KKR Financial sought to restructure, the company, based in San Francisco, said in a regulatory filing Tuesday. KKR Financial, whose stock has fallen 50 percent in the past year, did not say how much debt is affected.

The announcement rekindled concerns that the decline in the market for short-term asset-backed debt, which totaled $1.2 trillion in August, would accelerate after a rebound early last month. Assets fell to $796 billion in the week ended Feb. 13, the third straight weekly drop. Standard Poors downgraded ratings on notes issued by KKR Pacific Funding Trust last week, citing uncertain pricing on the AAA-rated securities that support them.

“The picture is getting worse and worse,” said Felix Freund at Union Investment in Frankfurt. KKR Financials second repayment extension “shows there is still a lot of levered investments in the credit market that we cant see.”

About half the debt will be due by March 3 instead of Feb. 15, with the rest owed on March 25, according to the filing.

The talks come less than six months after the fund received a $230 million cash infusion from investors following losses on residential mortgages in the wake of the U.S. subprime crisis. The fund, led by the chief executive officer, Saturnino Fanlo, raised a further $270 million in a rights offering with some partners of KKR, based in New York, buying shares. The fund had $19 billion of assets at the end of December.

The deferral drove investors to seek the security of government debt, sending 10-year Japanese bonds to the biggest gain in two weeks while perceived corporate risk in Asia and Europe soared. Contracts on Europes Markit iTraxx Crossover index of 50 companies with mostly high-yield credit ratings increased 26.5 basis points to 611.5, according to Deutsche Bank.

“The driver behind the current repricing is KKR Financial Holdings delaying repayment of CP for the second time,” analysts led by Mark Harmer, head of credit research at ING Groep, wrote in a note to clients.

Shares of KKR Financial fell 30 cents, or 2.1 percent, to $14.23 at midday in New York.

Zoe Watt, a spokeswoman for KKR in London, declined to comment.

PARIS: Global market turmoil took the shine off the earnings of two more European banks on Wednesday.

BNP Paribas, one of the largest banks in France, reported a 42 percent decline in fourth-quarter profit after writing down the value of securities hurt by worsening credit markets.

And Alliance Leicester of Britain warned that a big rise in funding costs would derail 2008 profit after a writedown on risky assets hit 2007s results.

BNP Paribas said net income fell to \1.01 billion, or $1.47 billion, from \1.72 billion a year earlier, matching the estimated earnings figures BNP Paribas released on Jan. 30. The banks shares fell 30 cents to \59.69.

BNP Paribas took \589 million worth of writedowns on leveraged loans and debt backed by bond insurers, and set aside \309 million linked to U.S. loans and securities. But the banks \1.2 billion costs in 2007 related to the U.S. subprime crisis were dwarfed by the more than $18 billion of markdowns by UBS, the largest European bank, and were less than those of rivals in France, Sociйtй Gйnйrale and Crйdit Agricole.

“This shows the banks strategy allows it to make it through a crisis,” said Benoоt de Broissia, a fund manager at Richelieu Finance. “It came out better than its French and European counterparts.”

BNP Paribass full-year profit rose 7 percent to \7.8 billion, a record for the bank. The French company was one of the first banks publicly caught up in the credit market seizure in August when it froze three funds, saying it could no longer find prices for some of the securities that it held. The funds were later reopened.

Alliance Leicester surprised investors by estimating that funding would cost about 150 million, or $292 million, more this year than under normal circumstances as it takes precautions to avoid the crisis that hit a rival bank, Northern Rock, last year.

The news, alongside a 30 percent drop in 2007 profits, a gloomy outlook into 2009 and dividends that were put on hold have sent the banks shares down over 18 percent to a record low.

Alliance Leicester suffered a 185 million writedown on its exposure to assets that have been tarnished by the U.S. sub-prime housing crisis - in line with guidance three weeks ago. That cut its 2007 pretax profit to 399 million, below an average forecast of 416 million, according to Reuters estimates.

The bank reported higher funding costs of 23 million in the fourth quarter and said that 2008 costs would be 150 million more than usual as it had “taken prudent measures” to increase its level of liquidity and the maturity of its wholesale funding, due to the risks of short-term balance sheet financing.

“Thats come at a cost, but we feel its the right thing to do to pay the price for security,” said Chris Rhodes, the finance director who is also acting as chief executive.

“Were now talking about a very strong funding position that takes us into Q1 2009,” he said about the first quarter, but added that some of the higher costs will be repeated in 2009. Rhodes said the bank had not considered tapping the Bank of England for funds.

“It wasnt an option to take funding from the Bank of England because of the stigma that is attached to it.”