Cathay Financial Holding Co, (國泰金控) the nation’s largest financial service provider, has a total exposure of NT$1.0532 billion (US$32.87 million) in investments linked to bankrupt Lehman Brothers, a company executive said yesterday.
“Despite the potential losses from our exposure, we expect limited impact on the company’s finances since we’ve had more assets under management than our peers,” Liu I-cheng (劉奕成), executive vice president of Cathay Financial said yesterday.
The company is unlikely to recover its direct exposure of US$2.7 billion in Lehman Brothers shares but may recover some cash from the future liquidation of its US$30 million-worth credit-linked notes invested in Lehman Brothers, he said.
Cathay Financial distributes seven structured notes issued by Lehman Brothers, worth at least NT$450 million, to local investors, the company’s statement said.
Although losses from the structured notes will be incurred by investors, Cathay Financial will follow the financial regulator’s contingency measures to cut losses, Liu said.
The Financial Supervisory Commission yesterday estimated the local banking sector’s total exposure of investments linked to Lehman Brothers at approximately NT$40 billion with another NT$40 billion exposure by individual investors put down in related structured notes.
The commission will keep a close eye on follow-up developments the statement said.
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