Banks play down WorldCom fears

BANKS and insurers sought to calm City fears about their exposure to WorldCom after nervous investors sent the sector's shares spiralling. Abbey National, Barclays and Lloyds TSB all said their exposure to the US telco was minimal.

Insurer Prudential puts its exposure at $150m (£100m) - out of a total US bond book worth more than $40bn. Barclays' exposure is reportedly $75m. Allied Irish Banks is reportedly in for less than $50m. Sources at HBOS and Royal Bank of Scotland also played down possible damage.

WorldCom has confessed to a $4bn accounting scandal, sending stocks worldwide crashing. Abbey was off 5.5% at 727 1/2p, the sharpest faller among London banking stocks, on concerns that it would have to take even higher provisions. Barclays was off 2.1% at 529p, Lloyds 4.2% at 632p, Prudential 4.6% at 544p.

Axa, the French-owned insurer behind Sun Life, PPP Healthcare and Alliance Capital, said it had exposure of e40m (£27m), mainly in its fixed income business. Dutch bank ABN Amro said it would need to raise provisions by up to e100m should WorldCom collapse. But it saw no need to change its expected level of provisioning for the current year. Analysts reckon ABN could have exposure of up to $850m.

Just over a year ago WorldCom unveiled plans to tap investors in Europe and the US for £7.7bn through a bond issue.