He Guangbei

Bank of China (Hong Kong) reported yesterday the first quarter asset writedown of HK$550 million linked to the subprime crisis.

Bank executives said the credit crunch has reached a bottom but its subsequent impact is yet to disappear.

The bank currently has HK$2 billion subprime related assets. "We made HK$550 million provision writedown for the first three months this year, which is enough," said He Guangbei, vice chairman and chief executive of Bank of China (Hong Kong).

"We rewrite our book value according to the international standard accounting rules and the latest writedown is at a right level and truly reflects the market value," said Xiao Gang, chairman of Bank of China.

Xiao told reporters at the bank's annual general meeting in Hong Kong yesterday that the devastating earthquake had "very little" impact on lender's profitability in 2008. However, the country's second-largest lender suffered losses in the catastrophe.

Two branches close to the quake epicenter in Sichuan collapsed and 20 employees were killed.

"We have two outlets located respectively in Dujiangyan and Mianzhu collapsed when the earthquake struck. A total of 35 staff members were trapped and 15 of them had been rescued," Xiao said.

He said the bank's first priority is to help rescue the victims and rebuild offices in the disaster area.

In order to provide assistance to the earthquake victims in Sichuan, Bank of China (Hong Kong) donated HK$10 million through the Central Government's Liaison Office in Hong Kong SAR to the quake-affected areas.

Xiao said Bank of China will maintain a loan growth at over 10 percent in 2008 despite the banking authorities' tightening policies on loans by the country's commercial banks.

"We will give loans in line with regulator's policy," he said.

Shareholdings in BEA

Bank of China (Hong Kong) acquired a 4.94 percent stake in Bank of East Asia (BEA), Hong Kong's biggest local lender. He told reporters yesterday that the bank will not increase shareholdings in BEA, though it is widely expected that the two banks may have greater cooperation in the long term.

"The acquisition is part of the company's financial investment portfolio, and our cooperation is just like those with any other banks in Hong Kong," said He.

Bank of China (Hong Kong) said it has no current plans or any agreement for board representation at BEA, and won't involve itself in the bank management.

BEA'shares rose nearly 5 percent following the announcement that Bank of China (Hong Kong) acquired stakes in BEA for HK$3.95 billion late last year.

(HK Edition 05/21/2008 page2)