Failed investment in the subprime-related market is forcing the country's top lender by assets - Industrial and Commercial Bank of China - to write down US$369 million or 30 per cent of its portfolio of US$1.23 billion in mortgage-backed investments in the United States, according to a mainland media report.
China Business News quoted ICBC chairman Jiang Jianqing as saying in an internal meeting last Friday that provisions in the fourth quarter had increased and that the full-year write-down for failed investments would total 30 per cent of the bank's subprime portfolio.
An ICBC spokesman denied that Mr Jiang had mentioned an exact figure of a provision publicly, adding that information from the internal meeting was confidential.
The report echoed an earlier story by Caijing magazine that ICBC would raise provisions to 30 per cent while its closest rival China Construction Bank Corp would write down 40 per cent of its mortgage-backed assets.
Last week, Mr Jiang confirmed in Macau that while the amount of ICBC's provisions had risen in the fourth quarter, its subprime assets remained at the same level as in the third quarter, at about US$1.2 billion.
'The provision amount made by ICBC is still considered immaterial compared with its full-year earnings, which was about 49.26 billion yuan for 2006,' said Samuel Chen, an analyst at JP Morgan.