labels: economy - general, banks & institutions
Bank of China may take a $11.25 billion charge as three other Asian banks reveal subprime exposuresnews
24 August 2007

Mumbai: State-run Bank of China reported subprime mortgage-related holdings of about $11.25 billion even as three other big banks in Asia revealed greater-than-expected exposure to the US mortgage loan crisis.

Bank of China and its BOC Hong Kong arm reported a combined $11.25 billion in subprime-related holdings, the largest potential exposure disclosed so far by an Asian lender.

The news added to fears that Asian lenders, although domestically focused and risk-averse after the Asia financial crisis of a decade ago, were not as immune as investors had hoped from the subprime meltdown.

While three Asian banks' heavy exposure to subprime US mortgage loans reinforced global credit woes, Germany, France and Italy saw no signs of new problems.

Singapore's DBS Holdings Group Holdings, meanwhile, said it had $1.6 billion in holdings of collateralised debt obligations, nearly double the exposure it initially declared.

Cathay Financial, Taiwan's largest financial holding firm, said about T$3.3 billion ($100 million) of its T$29 billion in CDOs were exposed to the subprime US market, although it denied having suffered any losses so far.

Another Beijing bank, the Industrial and Commercial Bank of China, the world's largest lender by market value, is holding $1.23 billion in mortgage-backed securities, accounting for 4.3 per cent of its foreign exchange investment portfolio.

Bank of China said that it held $8.965 billion in US subprime mortgage-backed bonds and $682 million in CDOs at the end of June.

The bank said it had set aside provisions of $151 million to account for potential losses.
Of the mortgage-backed bonds, Bank of China said 75.38 per cent of its exposure is AAA-rated while 21.7 per cent is AA-rated and 2.92 per cent is A-rated. Of the CDOs, 81.8 per cent carry the top rating and the rest are rated AA.

Bank of China's subprime bonds make up 3.51 per cent of its securities portfolio, while the CDOs account for 0.27 per cent.

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Bank of China may take a $11.25 billion charge as three other Asian banks reveal subprime exposures