The bank confirmed yesterday that it held some assets in South Korea, although a spokeswoman said they represented less than one per cent of its total assets, which stand at pounds 123bn.
She added: "These are high quality assets with the majority of them guaranteed by the state. We have not suffered any losses as a result and we do not expect to suffer any in the future but we are monitoring the situation carefully."
The bank later said that all its exposure to South Korea was in the form of sovereign debt adding that it had no exposure to corporate bonds or any currency exposure since any government bonds bought in the local Korean currency, the won, would have been hedged in dollars or sterling.
Abbey National unwound a number investments in Asia held in the form of asset backed securities, treasury bills and government bonds last summer. As a result it managed to reduce its exposure to the region before its economies began to crash last autumn.
The bank has a large treasury operation which controls pounds 62bn of assets. There had been speculation in the market that Abbey had investments in Korean corporate bonds, financed through the issue of its own paper. However, the bank insisted that all its bond holdings were sovereign.
Abbey, which reports its results on 26 February, also has some exposure in the inter-bank market in Asia, mainly through loans to Japanese banks.
According to estimates by Salomon Smith Barney, British banks may have total exposure of $5.8bn (pounds 3.6bn) in Korea and $4bn in Indonesia. Salomon estimates that HSBC is the most exposed with $3.4bn of loans to the two countries.Reuse content