Bank of China shares rebound in HK

But Shanghai shares slide further despite bank's denial of big sub-prime losses.

    Bank of China is the country's biggest owner of US sub-prime mortgage securities [GALLO/GETTY]

    But Bank of China's Shanghai-listed shares continued to slide, falling 8 per cent in morning trade on Wednesday despite an overnight statement from the bank saying it expected profit to increase regardless of losses from US sub-prime mortgage securities.

     

    A day earlier, trading in the bank's Shanghai-listed shares was suspended after stock exchange authorities said the bank had failed to comment on "an important event".

     

    Later, however, the bank released a statement describing as "unfounded" reports - first carried in Hong Kong's South China Morning Post on Monday - that its 2007 profits would see a significant drop, or even an outright loss.

     

    "The bank is unaware of the source upon which such statements are based," Bank of China said in a statement posted on the websites of both the Hong Kong and Shanghai stock exchanges overnight on Tuesday.

     

    It added that unaudited accounts for the year ended December 31 showed the bank's after-tax profit had continued "record growth" compared with the previous year.

     

    It said the accounts took into account provisions made for holdings of sub-prime securities.

     

    "The bank will make appropriate disclosure in accordance with the relevant regulations if and as necessary," the statement said.

     

    Bank of China is the country's biggest owner of US sub-prime mortgage securities.

     

    In October the bank said those securities accounted for 3.05 per cent of its total holdings, adding that it had set aside $473m for potential write downs.

     

    US banking giants Citigroup and Merrill Lynch have reported billions in losses after writing down the value of mortgage-related securities.

    SOURCE: Agencies


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