The mainland's largest foreign exchange lender, Bank of China (3988), has increased efforts to ease investors' doubts regarding possible losses due to its subprime investment. The bank has put aside sufficient money to cover all subprime investment exposure. It also sold all its collateral debt obligation, which came to US$400 million (HK$3.12 billion) to US$500 million, according to its 2007 third- quarter report, chairman Xiao Gang said.
"We noticed the subprime market is worsening, but our subprime portfolio has improved," Xiao said during the launch of a joint-venture asset management project with US fund house Blackrock.
As of end-September, the Beijing- based bank said it had an exposure of US$7.95 billion in subprime-related assets, and about US$800 million had been set aside for possible losses.
The bank's subprime portfolio was decreasing gradually, with mortgage- related assets dropping to between US$6 billion and US$7 billion by the end of last year, some banking analysts speculated. Despite market rumors that the bank would have a big writedown on its investments in US subprime related securities during the 2007 fourth quarter, Xiao said BOC would record a profit for the past year.
Xiao also said the loan growth business was satisfactory, with the bank having about 30 percent of the domestic foreign currency lending market.
BOC yesterday also received approval from the China Securities Regulatory Commission to relaunch its 10 billion yuan (HK$10.7 billion) fund, a joint-venture project with Blackrock.
Xiao also said the bank was looking to buy into a life insurer later this year, and had already entered into talks with some domestic insurers.
BOC shares dropped 2.55 percent to close at HK$3.06 yesterday.
