BOC shares plunge after U.S. subprime revelation ( Hong Kong bank holds 10 B..subprime paper..)

Marketwatch ^ | Aug 24, 2007 1:31 AM ET | Chris Oliver, MarketWatch

[Ernest_at_the_Beach]

HONG KONG (MarketWatch) -- Hong Kong-listed shares of Bank of China Ltd. plunged more than 6% Friday after officials disclosed the bank had almost $10 billion of exposure to securities backed by U.S. subprime mortgages.

The amount was much higher than many analysts were expecting, and likely places the BOC (HK:3988: news, chart, profile) among the largest holders of subprime-backed assets held by Chinese banks.

Bank of China, one of the mainland's four biggest lenders, is listed in Shanghai and Hong Kong.

Dominic Chan, an analyst who covers the bank for CLSA in Hong Kong, said most analysts had assumed subprime exposure amounting to about 1% of BOC's total U.S. dollar-denominated investments. Figures disclosed by BOC after the close of trading Thursday revealed subprime exposure closer to 10% of U.S. dollar investment, Chan said.

"The U.S. subprime asset back securities exposure turned out to be much bigger than what people thought," said Chan. "I think some analysts will start to cut their earnings."

In a filing with the Hong Kong Stock Exchange Thursday, the BOC said it made impairment charges of 388 million yuan ($51 million) against its exposure to subprime asset-backed securities, and 758 million yuan in charges against subprime collateralized debt obligations.

Chan said the impairment charges amounted to about 1.6% of the BOC's total exposure to the sector.

[TigerLikesRooster]

Some high official would become another “involuntary” organ donor soon.

[Ernest_at_the_Beach]

WE might oughta go looking for some bad actors over here too!

[TigerLikesRooster]

Those over here may well keep their yacht and mansion. They will be just downgraded from the super-rich to the affluent.

[dfwgator]

BOC shares plunge after U.S. subprime revelation

"And the prescription is more cowbell."

[Pro-Bush]

[WilliamofCarmichael]

Bank of China, one of the mainland's four biggest lenders. . .

Hey, Chi-Com banks are very, very familiar with tens (hundreds?) of billions of dollars in nonperforming loans. A little thing like this is no problem. Some western useful idiot bank will bail them out. Why not.

[Dr.Deth]

That’s the world of high finance for you. There’s the Red, and the Black.

[Old_Mil]

Fact is, this morning the Fed announced yet another infusion. The markets didn’t react in the end. This is like life support for a dying patient. Dow 7,800, here we come.

[Calpernia]

When the notes come due...

[GregoryFul]

BAC will make a deal for 8% preferred stock of 1/4 of the bank for a few billion (borrowed through the discount window, to encourage the small banks, hahaha) - oh, and then flip the stock to the market.

[TigerLikesRooster]

I did not know that. Seems painkiller no longer works.
It has been sinking into people that financial market is full of a mirage, spin, and manipulation. It is mostly subconscious process, I believe. Once this perception firmly sets in, it is really hard to break. Any further such trick to stem the tide would only further harden the perception, contrary to what is intended.

[Calpernia]

Bank of China Limited

Bank of America Corporation and China Construction Bank today announced an agreement on a memorandum of understanding to jointly enter into a new credit card collaboration aimed at providing innovative card products for the rapidly growing Chinese market.

[bruinbirdman]

"$10 billion of exposure to securities backed by U.S. subprime mortgages."

Ahhh Soooo, American salesmen could sell used chopsticks to a ChiCom.

yitbos

[ex-Texan]

Rate cut won't work

Excerpt:

With the growth in total U.S. financial debt outpacing GDP growth, 8.7% to 1.5%, [one expert} concludes, our economy is not capable of generating the income necessary to meet the debt-repayment requirements. The potential for disaster is mind-blowing, and any steps taken to paper this over are only prolonging the unavoidable wipeout.

My guess is that the Fed will try to inject liquidity into the system many more times over the next few months with scant success. It will take years to unwind this mess, which is probably not a problem that monetary policy, by itself, can solve. * * *

http://articles.moneycentral.msn.com/Investing/SuperModels/RateCutsWontCureAilingMarket.aspx?page=3

Countrywide CEO: Housing Slump Leads to Recession

Watch Video of Interview Here

The Implode-o-Meter is now at 135 +.

No big deal. Life goes on. The Three Amigos met in Canada this week. No one noticed because the MSM was focused on Hurricane Dean. Nobody even cares. Want to stay informed? Read my posts . . . Or not. Suit yourself. Yada, Yada.

[bruinbirdman]

"The ChiComs will buy the capitalist rope with which we will hang them." -- bruinbirdman

yitbos

[TigerLikesRooster]

Lenin’s curse on Chicom.:-)

[bruinbirdman]

Ya know, TLR, banks aren't supposed to be in that business. Few US banks, if any, may have had a few. In the US it was mortgage companies and hedge funds, private companies. Bernanke opens the window for $13B

In Europe the stupid state banks were stupid last man on the chain letter. The ECB opened its window for $130B and said there was no limit.

In China it is banks. You'd think the ChiComs have enough construction they could have their own sub-prime mortgages. Ooops. Forgot, there's no private property in Communist China to issue mortgages on.

yitbos

[TigerLikesRooster]

I have a question for you.

Europeans are always critical of the way U.S. conducts its financial business. However, if something goes wrong in U.S., Europeans frequently turn out to be involved in most questionable investment scheme in U.S..

Their words and their deeds seem to be world apart.

Why is that?

[Roy Tucker]

Well, as Warren Buffett says, “You don’t know whose swimming naked until the tide goes out.” Guess BOC was swimming El-Buffo.