Re: Lehman LEH
Posted: Thu Nov 27, 2008 3:52 pm
Lehman’s Asia risk is revealed
By Sundeep Tucker in Hong Kong
Published: November 26 2008 23:48 | Last updated: November 26 2008 23:48
Lehman Brothers built up a huge balance sheet exposure to Asian property in the form of loans and investments worth billions of dollars, the liquidators of the Hong Kong subsidiaries of the collapsed bank have revealed.
The book value of Lehman’s property exposure in Thailand alone is $1bn, while the bank’s Hong Kong units racked up a further $1bn exposure with about 100 loans or direct real estate investments across the region.
The subsidiaries also made inter-company transfers worth $5bn to the bank’s Japanese arm, which were invested in domestic property assets, while one Asian investment vehicle has a $500m position in Taiwan’s landmark high-speed rail project
The disclosures were made during an exclusive Financial Times interview with KPMG, the professional services firm appointed by the Hong Kong courts in September to oversee the liquidation of the bank’s local units.
The revelations offer a rare inside glimpse into the activities of Lehman’s internal operations.
Paul Brough, KPMG Asia head of financial advisory services, said: “We have worked on many of the biggest liquidations in the region over the past two decades and this one is by far the most complex and challenging.â€
KPMG is liquidating eight main Lehman entities registered in Hong Kong, which were responsible for the bulk of the bank’s non-Japanese operations in the region. The book value of assets belonging to these eight entities is up to $20bn. KPMG is yet to estimate what creditors are owed.
KPMG is about to begin the sale of Lehman assets and expects to hold the first creditor meeting for the Hong Kong-related entities in the new year.
Eddie Middleton, KPMG head of restructuring services, said there was no indication to date that the Hong Kong entities had transferred large amounts of money to the bank’s US holding company in the days ahead of the collapse, as had happened in the UK, and few clients had demanded access to Lehman’s now-frozen nominee trading accounts.
The bank’s liquidation has been complicated by its dismemberment and the different insolvency regimes governing its global operations. In recent days, KPMG partners have met their counterparts at PwC, administrators of Lehman’s UK arm, and Alvarez & Marsal, the firm restructuring the US assets, to discuss how to minimise the possibility of litigation relating to inter-company transfers.
Copyright The Financial Times Limited 2008
By Sundeep Tucker in Hong Kong
Published: November 26 2008 23:48 | Last updated: November 26 2008 23:48
Lehman Brothers built up a huge balance sheet exposure to Asian property in the form of loans and investments worth billions of dollars, the liquidators of the Hong Kong subsidiaries of the collapsed bank have revealed.
The book value of Lehman’s property exposure in Thailand alone is $1bn, while the bank’s Hong Kong units racked up a further $1bn exposure with about 100 loans or direct real estate investments across the region.
The subsidiaries also made inter-company transfers worth $5bn to the bank’s Japanese arm, which were invested in domestic property assets, while one Asian investment vehicle has a $500m position in Taiwan’s landmark high-speed rail project
The disclosures were made during an exclusive Financial Times interview with KPMG, the professional services firm appointed by the Hong Kong courts in September to oversee the liquidation of the bank’s local units.
The revelations offer a rare inside glimpse into the activities of Lehman’s internal operations.
Paul Brough, KPMG Asia head of financial advisory services, said: “We have worked on many of the biggest liquidations in the region over the past two decades and this one is by far the most complex and challenging.â€
KPMG is liquidating eight main Lehman entities registered in Hong Kong, which were responsible for the bulk of the bank’s non-Japanese operations in the region. The book value of assets belonging to these eight entities is up to $20bn. KPMG is yet to estimate what creditors are owed.
KPMG is about to begin the sale of Lehman assets and expects to hold the first creditor meeting for the Hong Kong-related entities in the new year.
Eddie Middleton, KPMG head of restructuring services, said there was no indication to date that the Hong Kong entities had transferred large amounts of money to the bank’s US holding company in the days ahead of the collapse, as had happened in the UK, and few clients had demanded access to Lehman’s now-frozen nominee trading accounts.
The bank’s liquidation has been complicated by its dismemberment and the different insolvency regimes governing its global operations. In recent days, KPMG partners have met their counterparts at PwC, administrators of Lehman’s UK arm, and Alvarez & Marsal, the firm restructuring the US assets, to discuss how to minimise the possibility of litigation relating to inter-company transfers.
Copyright The Financial Times Limited 2008