BoB denies any link to US subprime mortgages

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Mumbai, Mar 5: Bank of Baroda, in a statement issued on Wednesday, denied any exposures to investments linked to the US subprime market.

The bank does not have any exposures to collateralised debt obligations or credit default swaps, the release clarified. The bank, however, said it was having an exposure to credit-linked notes (CLNs) with reference entities as single Indian corporates or banks.

BoB’s total exposure in CLNs was Rs 1,296 crore as on December 31, 2007, and full provisioning was made as per the mark-to-market norms.

The outstanding provisioning as on December 31, 2007, was Rs 11.06 crore and “if these investments are marked to market as of February 29, 2008, there would be additional provisions of $ 2.5 million or Rs10 crore approximately, as credit spreads have widened,’’ said the release.

Earlier ICICI Bank, the country’s second largest bank, had reported as on January 31, 2008, a mark -to-market loss of $264.34 million in its overseas operations from exposure to credit derivatives and investments. ICICI Bank and overseas banking subsidiaries have an aggregate exposure of $2.2 billion in credit derivatives .