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Wednesday, 9 July 2008

Subprime fallout could last two years: Singapore bank head

SINGAPORE, July 8, 2008 (AFP) - The global fallout from the US subprime mortgage crisis could last another two years, the chairman of Singapore-based United Overseas Bank said in a newspaper report Tuesday.

"I hope I am wrong, but my view is that this crisis will take one to two years to stabilise," Wee Cho Yaw, a banker for almost 50 years, told a university commencement ceremony, The Straits Times reported.

A bank spokeswoman confirmed the quotes when contacted by AFP.

The default crisis in the US subprime -- or higher risk -- mortgage sector ballooned into a world credit squeeze as banks tightened lending criteria. The crisis has also battered financial markets.

"What worries me is that no one seems to know the full amount of off-balance sheet securities circulating in the financial markets," Wee was quoted as saying.

The subprime homeloans were repackaged into securities and sold to investors around the world. The wave of defaults led to billions of dollars in losses on those securities, damaging the balance sheets of major international banks.

"And this is what frightens me most -- no one can tell me how much more will be written off...," The Straits Times quoted Wee as saying.

Wee said regulators will need to ensure closer supervision of financial institutions and the "exotic trades" that have arisen over the past decade, the newspaper reported.

UOB has a regional presence, including subsidiaries in Malaysia, Indonesia, China and Thailand.

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