Fitch: limited impact on Asia-Pacific banks from Lehman bankruptcy

Fitch Ratings, one of the leading international rating agencies, announced on Sept. 16 that preliminary findings from its investigation of exposure to Lehman Brothers held by banks in the Asia Pacific Region suggest that, for the most part, net exposures are small and the direct impact on banks will be limited.

The largest exposures are held by banks in Japan. For all the banks the exposures are small in relation to equity capital but provisions could adversely affect earnings - this is at a time when banks are already absorbing other losses arising from the credit crisis.

Australian banks have not released comprehensive information but Commonwealth Bank of Australia has stated that its exposure is less than AUD150m. Australia & New Zealand Banking Group has stated that its total exposure is USD120m. The filing also shows that both ANZ and National Australia Bank had small exposures in the form of letters of credit.

Korea's financial sector regulators have disclosed that the whole system has exposure of USD720m. The direct risk to Korean banks appears small. The risk of Korea's securities firms may be more significant.

Preliminary data disclosed by Taiwan Financial Supervisory Committee indicates that the Taiwanese financial system as a whole has USD2.5bn exposures related to Lehman credits.

Among Chinese banks, only Bank of China was listed as a significant unsecured lender with USD50m but potential losses are not material for a bank of BOC's size.

Thai banks have generally limited exposure, with Bangkok Bank Public Company Limited the highest at THB3.5bn accounting for only 2% of its equity. Among Indian banks, ICICI Bank Ltd. has disclosed exposure of a modest EUR57m. The three Singapore banks have indicated that their direct exposure is not material. Data from banks in Hong Kong is not yet complete, but among the banks that have provided information none so far have acknowledged a material exposure to Lehman.

However, the agency will continue to investigate the full extent of these banks' on-and-off-balance sheet exposures and take account of potential losses that will add to the existing burden of writedowns stemming from the credit crisis.

By People's Daily Online