UPDATE 1-ANZ says it has limited exposure to Allco

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SYDNEY, March 7 (Reuters) - Australia and New Zealand Banking Group Ltd (ANZ.AX: Quote, Profile, Research, Stock Buzz), Australia third-biggest lender, has very limited exposure to Allco Finance Group Ltd (AFG.AX: Quote, Profile, Research, Stock Buzz), ANZ Chief Executive Mike Smith told a media briefing on Friday.

Shares in asset manager Allco have been hammered on concerns over its high debt levels and opaque business model, and the company is looking to sell non-core assets to repay some of its maturing debts.

"Our exposure is really irrelevant in the overall scheme of it," Smith said, when asked if ANZ has lost faith in the company in the wake of Allco's recent troubles.

Allco shares tumbled as much 48 percent to A$0.33 on Friday as they resumed trading. On Thursday, margin lenders took possession of 14 percent of Allco's shares from a major stakeholder after it failed to come up with additional security on the margin loans.

ANZ shares dropped 4.3 percent to A$20.26 on worries that Australian banks would be hit by higher provisions due to their exposure to highly geared companies. ($1=A$1.08) (Reporting by Denny Thomas;)