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Local financial institutions reveal their exposure

Domestic financial institutions revealed their exposure yesterday to investments linked to Lehman Brothers Holdings, insisting losses would be within an acceptable range.

State-run Hua Nan Financial Holdings Co (華南金控) had an exposure of NT$440 million (US$13.72 million) in Lehman Brothers-related investments and expects to recover at “an estimated 40 cents on the dollar,” company president David Lee (李正義) told investors yesterday.

Hua Nan had also sought legal protection for a NT$1.8 billion loan to a local asset management company set up by Lehman Brothers’ Malaysia-based subsidiary, although it said the loan was “fully collateralized” with valuable properties and development projects in Taiwan estimated to be worth NT$2.2 billion, Lee said. Hua Nan also distributes a total of NT$460 million in structured notes, whose potential losses would be incurred by individual investors.

Filings on the Taiwan Stock Exchange showed that Shin Kong Financial Holding Co (新光金控) had a total exposure of NT$2.571 billion, the biggest among peers, while King’s Town Bank (京城銀行) had an exposure of NT$302 million in the US investment bank.

Taishin Financial Holdings Co (台新金控) has the nation’s second largest exposure at NT$1.8 billion, while SinoPac Financial Holdings Co (永豐金控) said that its subsidiary SinoPac Capital (Asia) Ltd (永豐金融資(亞洲)) had invested NT$55 million in structured notes issued by AIG-FP Matched Funding Corp, their exchange filings said.

The Bank of Kaohsiung (高雄銀行) said in an exchange filing on Monday that it had NT$568 million in investments linked to Lehman and had distributed two structured notes by the US investment bank worth NT$644 million.

EnTie Commercial Bank (安泰銀行) also said that it still had investments of NT$772 million, NT$511 million and NT$126 million respectively in Lehman Brothers, Merrill Lynch and American International Group Inc and expects losses from Lehman Brothers-related investments to reach NT$533 million.

Meanwhile, the Financial Supervisory Commission (FSC) yesterday said that statistics from the insurance association showed that domestic life insurers have a total exposure of NT$464 million in indirect investments linked to Lehman, adding that they were fully guaranteed at maturity.

ING Life Insurance Co (安泰人壽) has invested some NT$1.05 billion (US$32.9 million) in Lehman Brothers, which accounted for as low as 0.2 percent of its total assets, worth NT$527.3 billion, Richard Fung (馮元輝), the insurer’s head of bancassurance in Greater China, told reporters at the sidelines of the company’s launch of new mortgage insurance policy.

Taiwan Life Insurance Co’s (台灣人壽) Lehman Brothers related exposure reached NT$1.352 billion, while China Life Insurance (中國人壽) has no investments related to the US investment bank, their exchange filings said on Monday.

Polaris Securities Co (寶來證券) has invested US$11 million in bonds issued by Lehman Brothers, its exchange filing said yesterday.

The FSC yesterday said that it had no reason or legal footing to freeze Lehman Brothers Taiwan Securities Ltd’s (台灣雷曼證券) assets, worth NT$1.4 billion. The local securities brokerage company won’t be held accountable for the US parent company’s liabilities, commission Vice Chairwoman Lee Jih-chu (李紀珠) told a press conference yesterday.


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