Fitch: Lehman impact on Asian Pacific banks limited

Fitch Ratings said it said preliminary findings from its investigation of exposure to Lehman Brothers held by Asian Pacific banks suggest that, for the most part, net exposures are small and the direct impact on banks will be limited.

However, the agency said it will continue to investigate the full extent of these banks' on-and-off-balance sheet exposures and take account of potential losses that will add to the existing burden of writedowns stemming from the credit crisis.

Korea's financial sector regulators have disclosed that the whole system has exposure of $720 million. Only $28 million is in the form of loans; a further $290 million is in securities including credit-linked notes and $390 million in equity-related derivatives. The direct risk to Korean banks appears small, Fitch said.

Taiwanese banks also were named in Lehman's bankruptcy filing as significant unsecured lenders: Hua Nan Commercial Bank with $59 million, both First Commercial Bank (Taiwan) and Bank of Taiwan each with $25 million and Taipei Fubon Bank with $10 million. Potential losses may impact earnings, but are not very material, the agency said.

Among Chinese banks, only Bank of China was listed as a significant unsecured lender with $50 million, Fitch said, but potential losses are not material for a bank of that size.

Thai banks have generally limited exposure, with Bangkok Bank plc the highest at 3.5 billion in Thai baht accounting for only 2% of its equity, the agency said.

Among Indian banks, Icici Bank Ltd. has disclosed exposure of a modest €57 million.

The three Singapore banks have indicated that their direct exposure is not material, Fitch said.

Data from banks in Hong Kong is not yet complete, but among the banks that have provided information none so far have acknowledged a material exposure to Lehman, the agency said.

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