Two Chinese banks take financial hit from subprime crisis

by Richard Kilner

Story link: Two Chinese banks take financial hit from subprime crisis

Yesterday saw the Industrial & Commercial Bank of China and Bank of China record improved performances for the fourth quarter, despite being damaged by exposure to the US subprime mortgage market.

Bank of China is the country’s most exposed financial institution, with $5bn in asset-backed securities at the end of the last calendar year.

However, the Bank of China believes that it will not incur any further financial damage due to the $1.58bn markdowns in provisions and holdings it has booked.

The Industrial & Commercial Bank is exposed to the tune of $1.23bn, and has consequently booked $400m as an allowance for losses.

The Bank of China has announced it intends to accelerate its overseas expansion plans this year.

The losses incurred by the two banks did not come as a surprise to the Chinese financial services industry, and the quantity of the losses fell within estimates.