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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Cynic 2005 who wrote (40324)	9/24/2008 8:27:46 AM
From: Rolla Coasta	Respond to of 217650

Bank run on "false" rumor bloomberg.com Bank East Asia Finances Are `Sound,' Reports Rumors (Update3) By Bei Hu Sept. 24 (Bloomberg) -- Bank of East Asia Ltd., Hong Kong's third-largest lender, asked police to investigate ``malicious rumors'' that sparked a slump in its stock and queues at branches across the city. ``The management of BEA hereby states in the strongest possible terms that such rumors have no basis in fact,'' BEA said in an e-mailed statement today. ``The bank's financial position is sound and stable.'' BEA extended opening hours after phone text messages questioning the health of the bank triggered an 11 percent drop in the shares. The 90-year-old lender said its ``exposure'' to bankrupt Lehman Brothers Holdings Inc. and American International Group Inc., taken over by the U.S. government last week, is about $61 million, less than 0.2 percent of assets. ``We're a little bit concerned,'' said Sonny Hsu, a Hong Kong-based analyst at Fitch Ratings. ``We'll keep an eye on what's going on. If you just look at the numbers, I think the bank is financially still sound.'' Fitch rates BEA's long-term debt A-, the fourth-lowest investment grade. Moody's Investors Service has an A2 rating and Standard & Poor's assigned an A- grade to BEA's debt. ``The case is still under investigation and no arrest has been made so far,'' the Hong Kong police department said in an e- mailed statement. Customers Line Up BEA shares closed 6.9 percent lower after earlier tumbling 11 percent. The stock has dropped 53 percent this year, the worst performance among banks traded in Hong Kong, as losses on mortgage investments swelled. The bank on Sept. 18 reduced its first-half profit by HK$109 million because of ``manipulation'' of the valuation on equity derivatives it holds. Today, several hundred people surrounded the 90-year-old bank's branch at Des Voeux Road in central Hong Kong. ``I am very worried as most of our family's assets are with the bank,'' Annie Poon, 52, said outside the branch. ``My mother has gone to another branch to find out the latest.'' Joseph Yam, chief executive of Hong Kong's central bank, today said BEA has ``ample capital'' and the city's banking system is ``robust.'' BEA had HK$396.6 billion of assets as of June 30 and a capital adequacy ratio of 14.6 percent. Under Hong Kong's deposit insurance program, bank depositors are protected up to HK$100,000 in the case of a bank failure. Li Flying Back On Sept. 19, Moody's cut its outlook for BEA's credit rating to negative from stable, saying the bank's profit restatement raised ``further concerns over BEA's internal control and risk management.'' ``Bank of East Asia is a bit vulnerable because its first- half results were relatively weak compared to its peers,'' said Warren Blight, a Hong Kong-based analyst at Fox-Pitt Kelton, who has an ``in-line'' rating on the stock. ``So it looks quite vulnerable to possible rumor-spreading.'' Chairman David Li in February quit the city's cabinet after agreeing to pay $8.1 million in fines to the U.S. securities regulator for allegedly tipping off a friend about News Corp.'s takeover of Dow Jones & Co. Li agreed to pay the fine without admitting or denying wrongdoing. Li is returning tonight from the U.S., BEA Executive Director Joseph Pang said at a press briefing in Hong Kong. Trading Losses BEA booked about HK$93 million of trading losses after correcting the value of the equity derivatives, it said Sept. 18. No further losses have been recorded since June 30, the company added at the time. Stock markets worldwide lost $10 trillion in the first half of the year as a U.S. subprime mortgage collapse fanned out into wider concerns about global growth and bank liquidity. U.S. regulators are currently working on a $700 billion bailout plan for the U.S. financial system. Hong Kong's last bank run occurred in 1997, when International Bank of Asia suffered depositor withdrawals. On Nov. 11, 1997, the bank's then-Chief Executive Officer Mike Murad declared the run over. Outside BEA's Des Voeux Road branch, Moon Tam, 32, a saleswoman at a clothing chain, said she isn't worried as her deposit is ``small'' and secured by the government's deposit insurance program. To contact the reporter on this story: Chia-Peck Wong in Hong Kong at cpwong@bloomberg.net. Last Updated: September 24, 2008 06:07 EDT