The exposure of Italy's biggest bank Unicredit in the bankrupt American investment bank Lehman Brothers is ''limited,'' according to Unicredit CEO Alessandro Profumo.
Speaking to the press on the sidelines of a conference here in Sicily, Profumo said ''our greatest concern is the impact this failure will have on financial markets. Right now it is difficult to make any predictions or to have a clear picture of the situation''.
However, the Unicredit CEO did say that he expected the dollar to suffer in regard to the euro from the investment bank's collapse.
According to sources at the bank's offices in Milan, Unicredit's exposure in Lehman Brothers was less than its exposure in the American subprime mortgage crisis which began in late 2006 and has now caused the collapse of Lehman Brothers, which announced on Monday that it was filing for bankruptcy protection.
Another major US investment bank crippled by the subprime crisis, Merrill Lynch, has avoided bankruptcy by accepting a takeover offer at the weekend from Bank of America of some $50 billion, about half the bank's value last year.
Market sources said the collapse of Lehman Brothers is the biggest investment bank failure in 18 years, since Drexel Burnham Lambert went under because of its illegal activities in the junk bond market.
In related developments, financial sources said that it is likely that Lehman Brothers' offices in Milan and Rome will be closed.
Last week Lehman Brothers announced losses of $3.9 billion and said it would sell off its investment-management activities.
However talks with 'white knight' Barclays fell through at the weekend forcing management to file for Chapter 11 on Monday.
