Caja Laboral has 162 mln euros of Lehman bonds

MADRID, Sept 22 Mon Sep 22, 2008 10:38am EDT

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MADRID, Sept 22 (Reuters) - Spanish savings bank Caja Laboral said on Monday it held senior bonds from a Dutch subsidiary of failed U.S. bank Lehman Brothers for 162 million euros ($236.4 million).

The unlisted bank said it would have to set aside 40.7 million euros for the bonds, which it bought in 2004 to cover possible long-term interest rate reductions.

In a statement, Laboral said it had ample insolvency funds and the Lehman bonds would hit its results this year by "a sum significantly less" than the 162 million euros.

"In any case, at the moment, it is difficult to estimate exactly what the recovery percentage of the debt is," said the bank.

"There is no other exposure to Lehman Brothers in any other financial instrument, so none of our clients will be affected."

Last week, the Bank of Spain said the Lehman Brothers LEHMQ.PK failure will not hit Spanish banks badly [ID:nLG536959].

According to different press reports, Spanish banks and financial firms hold no more than 500 million euros worth of Lehman debt, a tiny chunk of about 270 billion euros in investments managed by the country's financial sector.

Spain's No.1 bank Santander (SAN.MC) has said it had 11 million euros of direct exposure to the failed investment bank [ID:nLF277245] and a further 44.6 million euros through derivative operations.

The second largest bank, BBVA (BBVA.MC), has 86 million invested in Lehman through its funds, according to stock market records, out of total investments valued at about 16 billion euros.

Spanish savings bank Bancaja last week said its clients had invested 13 million euros in Lehman through five funds. (Reporting by Sarah Morris; Editing by Jon Loades-Carter)

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