The Industrial and Commercial Bank of China (ICBC) is allocating
a 30 percent risk reserve to cover possible losses in its subprime
assets.
Jiang Jianqing, chairman of the country's largest commercial
bank, said at a meeting over the weekend that last year ICBC held
subprime assets of 1.2 billion U.S. dollars.
He said the bank's subprime holdings remained stable but risk
reserves had been increased in the fourth quarter after supervisory
departments issued warnings of a possible deterioration in the
subprime crisis.
In its third quarter report, ICBC said it held subprime mortgage
bonds of 1.228 billion U.S. dollars, for which it had allocated 429
million yuan (about 61 million U.S. dollars) in risk reserves.
The bank's shares rose by 0.50 yuan, or 7.43 percent, to close
at 7.23 yuan on Monday, while the key Shanghai Composite index
increased 8.13 percent.
ICBC had 8.6 trillion yuan in assets in September and generated
64.1 billion yuan in profit for the first three quarters of 2007,
an increase of 66 percent over the corresponding period in 2006,
according to the bank's financial report.
Of all the major commercial banks, Bank of China (BOC) and the
ICBC are believed to be the top two investors in the U.S. subprime
mortgage market.
In its half-year report, BOC said it held subprime mortgage
assets of 8.965 billion U.S. dollars, of which 75.38 percent had
AAA rating and 21.7 percent had AA rating. By the end of June, BOC
had allocated risk reserves of 1.146 billion yuan to cover possible
losses from the subprime assets.
Last month, investors rushed to sell BOC shares after a news
report said the lender was likely to record a loss for 2007 due to
subprime problems. BOC denied the hearsay and claimed it would see
growing profit in 2007 without elaborating.
The bank's shares rose 0.37 yuan, or 6.93 percent, to close on
Monday at 5.71 yuan.
(Xinhua News Agency February 5, 2008)
