Hongkong Bank chairman John Strickland yesterday revealed the HSBC group has a US$2.5 billion exposure to Indonesia, and that he expects bad and doubtful debts to rise.
Mr Strickland said he believed this was the highest level of any local bank but emphasised his bank was taking steps to ensure its debts would be recovered.
He did not go into details about the measures to try to secure repayment, saying only the bank had appropriate additional resources in place and sound procedures to ensure recovery.
The group last year had made a GBP175 million (about HK$2.21 billion) special general provision to reflect emerging credit difficulties in Asia.
Mr Strickland yesterday said the group had yet to form a firm opinion on whether it needed to make additional provisions for the region's difficulties.
The group will announce its decision on additional provisions in its interim results to be announced in August.
He said the potential impact of the situation in Indonesia on Hong Kong would be of a 'second order' nature.
Mr Strickland said in Hong Kong dollar terms the group's exposure to Indonesia had actually shrunk because of the devaluation of the rupiah during the past few months, but added bad and doubtful debts there were increasing.
He said the group was not expected to suffer in terms of its investments in the country as it operated through a branch there.