Reply #6: China bank sets aside subprime reserves

[ozymandius]

BEIJING - China's biggest bank, Industrial & Commercial Bank of China Ltd., has set aside reserves equal to 30 percent of its $1.2 billion in subprime holdings to cover possible losses, a state news agency reported Monday.

The report, if confirmed, would be the first indication that Chinese banks, which have so far avoided damage from the U.S. credit crisis, might face problems due to holdings of subprime mortgage securities.

ICBC chairman Jiang Jianqing disclosed the figures at a weekend meeting, the Xinhua News Agency said. Phone calls to ICBC's press and investor relations offices were not answered.

Chinese banks are believed to hold only modest amounts of subprime debt. But financial markets are watching them closely to see how they will be affected.

In January, investors sold Chinese bank shares after a news report that Bank of China, the country's No. 2 lender, might record a loss for 2007 due to subprime problems. Bank of China denied that but has yet to release details on the status of its subprime holdings.

http://news.yahoo.com/s/ap/20080204/ap_on_bi_ge/china_icbc_subprime_1