BOC faces US$20 billion debt

Bank of China Ltd may own about $20 billion of debt issued by Fannie Mae and Freddie Mac, representing two-thirds of total holdings among the six largest Chinese banks, according to CLSA Ltd.

The Freddie Mac and Fannie Mae investments would amount to about 2.6 percent of total assets at Bank of China, the nation's third-biggest, CLSA analysts said yesterday in a note to clients. That compares with 0.09 percent at larger Industrial and Commercial Bank of China Ltd, they said.

ICBC may have $1 billion of securities linked to the two beleaguered US home loan companies, while China Construction Bank Corp, the second largest, may have $7 billion of such holdings, according to the report. China CITIC Bank Co may own $1.4 billion of agency debt, CLSA said.

The government-sponsored companies tumbled on Tuesday in New York Stock Exchange composite trading as investors lost confidence in Treasury Secretary Henry Paulson's plan to shore up their finances. Moody's Investors Service reduced the lenders' financial strength ratings, saying credit losses may jeopardize dividend payments on preferred shares.

As most Chinese banks classify the holdings as available-for-sale or held-to-maturity, they are unlikely to book a loss on their income statements, and declines in bond prices in July won't affect first-half earnings, CLSA said.

Agencies

Extra teams to monitor fund use in quake zone

BEIJING  -- The Ministry of Supervision and the Central Discipline Inspection Committee of the Communist Party of China (CPC) have jointly sent another three teams to quake zones to monitor fund usage on Wednesday.

The fresh round of supervision focuses on three aspects: the use of substantive fund and the stock of quake relief materials; management of overseas donations, and fund transferring process.

The three teams will shoulder the supervision in quake-hit Sichuan, Shaanxi and Gansu provinces respectively .

The first team was sent to Sichuan on May 31 by the CPC discipline watchdog to ensure the proper use of relief funds and materials for the areas affected by the May 12 earthquake, which killed nearly 70,000.

The government disaster relief fund had topped 59.06 billion yuan (about 8.44 billion US dollars), including 53.70 billion yuan from the central budget and 5.36 billion yuan from the local budget.

According to the Ministry of Civil Affairs, domestic and foreign donations had reached close to 57.32 billion yuan in cash and goods by Monday noon, of which 20.9 billion yuan had been forwarded to the quake-hit areas.