Lehman Brothers built up a huge balance sheet exposure to Asian property in the form of loans and investments worth billions of dollars, KPMG, the liquidator of the Hong Kong subsidiaries of the collapsed bank, has revealed. The book value of Lehman’s property exposure in Thailand alone is $1bn, while the bank’s HK 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. KPMG was appointed by the Hong Kong courts in September to oversee the liquidation of eight main HK-registered Lehman entities, which were responsible for the bulk of the bank’s non-Japanese operations in the region. The book value of their assets is up to $20bn. KPMG is yet to estimate what creditors are owed; it will shortly begin the sale of Lehman assets and expects to hold the first creditor meeting for the HK-related entities in the new year.
