Hang Seng's turn to feel the pain
Nobody is immune from this current financial crisis. Hang Seng Bank found out the hard way yesterday.
The bank has always been considered a safe haven, a reputation that has made it the most expensive lender on the Hang Seng Index. But reputation counted for nothing as it suffered its largest single-day collapse since the Asian financial crisis after confirming its exposure to Washington Mutual, which was seized by US regulators last week.
Until yesterday, the HSBC-controlled company had prided itself as being the least affected of local banks by the global mayhem sparked by the US subprime crisis. It had a relatively clean book with no subprime or Lehman Brothers exposure.
Perhaps it considered itself too safe from the financial storm. Certainly, its response to the WaMu revelation was coy and unspecific, probably only adding to the uncertainty in the current rumour-infested climate that wiped HK$24.4 billion off its market capitalisation in a few hours.
Analysts don't expect Hang Seng's exposure to WaMu to be too damaging, but the disclosure does put the bank's HK$162 billion portfolio under the spotlight.
