The Wall Street Journal-20080205-ICBC Raises Subprime Provisions- Calls Exposure Small

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ICBC Raises Subprime Provisions, Calls Exposure Small

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BEIJING -- Industrial & Commercial Bank of China Ltd. said it raised provisions for its subprime assets at the end of last year as a prudent measure, but emphasized that its exposure to the securities remains relatively small.

At the end of last year, China's biggest lender by assets booked provisions equivalent to 30% of its $1.2 billion subprime assets, said Pan Gongsheng, the secretary to ICBC's board.

ICBC's late-December provision, 2.59 billion yuan ($360.6 million), exceeded the provision of 1.62 billion yuan it made at the end of September.

Mr. Pan's comments followed state media reports that Chinese banks were prompted to put aside more money to offset potential losses from their exposure to U.S. subprime mortgages. The country's banking regulator has warned of rising risks from the investments.

Despite the increased provisions, ICBC's exposure to the subprime crisis is "small" compared with banks in the U.S., Mr. Pan said.

He said ICBC will decide the amount of future provisions based on changes in the global financial markets.

-- Victoria Ruan