Bank of China’s (BoC) Hong Kong unit plans to tap a US$2.5 billion loan from its state-owned parent in order to shore up its capital, the Wall Street Journal reported. The announcement came as Bank of China (Hong Kong) warned that profit for the year would "decrease considerably." It expects further writedowns from losses on US mortgage-backed securities and unsecured debt issued by Lehman Brothers, the defunct investment bank. In October the bank announced provisional losses of US$412.8 million on these investments. BoC’s Hong Kong unit is also likely to take a hit on its 4.94% stake in Bank of East Asia, which earlier announced losses of around US$450 million on bad collateralized debt obligations. The bank, in which state-owned parent BoC has a 65.73% stake, said its overall financial position remains solid.
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