Shares in Australia's top banks came under pressure on Thursday after a report put their exposure to the US subprime crisis at one billion dollars (884 million US).
Shares in the big banks, ANZ, Westpac, National Australia Bank and Commonwealth Bank, all fell in reaction to the report in The Australian newspaper, although Commonwealth Bank reversed its losses in late trade to close marginally up.
The newspaper said that the four banks were part of a global syndicate of 40 banks that lent troubled US mortgage group Countrywide Financial 11.5 billion US dollars last year.
Analysts, however, said the fears were overplayed and the loans, although large, represented an insignificant part of the Australian banks' overall exposure. At the close, ANZ had lost 24 cents to 26.11 dollars, National Australia Bank fell 27 cents to 35.32 dollars and Westpac lost 36 cents to 26.60 dollars.
Commonwealth Bank bucked the trend and gained 11 cents to 56.95 dollars. "I am amazed about just how much the market has reacted to this for the simple reason that we're talking about 0.1 percent of the loan book of each of the banks involved - it's minute," said Peter Rice, a banking analyst at stockbrokers BBY Ltd.
"Obviously there is some emotion involved with this because it involves subprime exposure, but the banks have repeatedly said they don't have much exposure - the magnitude here is very, very small - we're talking about chickenfeed," he said. Rice said the major Australian banks are actually faring well from the changed market conditions as they have been able to increase net interest rate margins for the first time in a decade.
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