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China Merchants Bank denies losses from subprime mortgage crisis |
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08:00, August 15, 2007 |
China Merchants Bank (CMB), the sixth biggest lender on the Chinese mainland, reported a 13.4-percent yield by selling its U.S. mortgage-backed securities, according to Ma Weihua, president of the bank.
Ma rejected the media report that the bank incurred a loss of 103 million yuan in the U.S. subprime crisis from its investment in mortgage-backed securities, saying the bank had sold out all the securities in August last year and has not been exposed to the U.S. sub-prime lending market since then.
The Hong Kong-listed bank bought its U.S. mortgage-backed securities in 2004 based on its judgement that the U.S. real estate market may witness strong growth amid declining interest rates.
The Chinese bank sold all the securities in August 2006 as it sensed the potential risks in the investment, because the U.S. housing market had boomed for two straight years then, Ma said.
Besides, he said, the 13.4 percent rate of returns was good enough for us.
Ma did not reveal the size of his bank''''s investment in the U.S. mortgage-backed securities, but the bank''''s interim report released last Friday shows that mortgage accounted for 77.5 percent of its retail loans at the end of the said period.
The management holds that the bad loan ratio of the bank''''s mortgage is quite low, according to Ma.
He also made clear that the bank has no outstanding loans to any financial institutions that hold the U.S. mortgage-backed securities.
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