BEA said it had got rid of the collateralised debt obligations (CDOs) after deciding they could face further losses if they waited any longer to sell, the bank said in a statement to the Hong Kong Stock Exchange.

'It is the directors' assessment that the likely residual net value of the portfolio would be further substantially eroded if held until maturity,' the statement said.

But the bank insisted it remained in a strong position, despite a recent run by savers worried about its stability.

'The directors believe that this disposal is in the best interest of the bank and its shareholders as it will eliminate the bank's exposure to any further mark-to-market losses in the value of this asset,' the statement said.

'As a result of the above losses, the profits of the bank for the year ending 2008 are expected to fall substantially as compared with that for the year ended 2007,' the statement added.

Last year, Hong Kong's fifth largest bank by assets reported a net profit of HK$4.14 billion. -- AFP