Bangkok bank worst hit by lehman crisis

Bangkok Bank is saddled with the largest exposure - Bt3.5 billion or US$102 million - to Lehman Brothers, which recently filed for bankruptcy protection in the United States.

Aside from the country's biggest commercial bank, only Bank of Ayudhya and Krung Thai Bank have some indirect investment in Lehman Brothers in the form of collateralised debt obligations (CDOs).

"There may be some losses incurred to this investment," which is mostly in bonds, Bangkok Bank executive vice president Kulathida Sivayathorn was quoted by Bloomberg as saying yesterday. "But I don't think it will be a total loss."

Lehman made the biggest bankruptcy filing in history, seeking Chapter 11 protection after Barclays and Bank of America abandoned takeover talks and the credit crunch helped wipe out 94 per cent of its market value.

South Korea's financial regulator said on Monday that Korean firms have about $720 million in loans and securities linked to Lehman.

"Bangkok Bank's exposure would be the biggest by a Thai bank so far," said Poramet Tongbua, head of research at Tisco Securities. The bank wrote down $50 million on its CDO investment after the collapse of the US mortgage market last year.

Bank of Thailand Deputy Governor Bandid Nijathaworn said on Monday that local banks have Bt102 billion invested abroad, or about 1.3 per cent of their funds. Their loans and investments in debt instruments with Lehman total about Bt4.3 billion, he said.

Derivatives, mostly cross-currency swap contracts, total about Bt5.3 billion.

Krung Thai Bank president Apisak Tantivorawong said its indirect investment in Lehman Brothers represented only 1 per cent of the bank's investment in CDOs. As of February, the bank reported that it had CDO investments of $160 million.

Bank of Ayuhdya said its investment in CDOs linked to Lehman Brothers represented only an "insignificant portion" of the $85 billion in CDOs it has invested.

Siam Commercial Bank, the third largest by assets, said it sold its entire investment in Lehman Brothers before the US investment bank filed for bankruptcy.

The Bangkok-based bank sold the securities linked to Lehman at "a little loss", president Kannikar Chalitaporn told reporters in Bangkok. The loss, which will be booked in the bank's third-quarter earnings, has no impact on its financial position, she said, without elaborating on the amount of those investments.

Poramet of Tisco said Siam Commercial Bank's Lehman-linked investment was about Bt1.2 billion.

Kasikornbank, TMB Bank, Siam City Bank and BankThai said they did not hold any securities linked to Lehman.