Aug. 14 (Bloomberg) -- Bank of China Ltd., the nation's largest foreign-exchange lender, denied a report it may have a 3.85 billion yuan ($508 million) loss this year from investments in U.S. subprime loans.

``The report is groundless and irresponsible,'' Wang Zhaowen, a spokesman at Beijing-based Bank of China, said in an e-mailed statement today.

The company will disclose information about subprime-related holdings in its first-half earnings report due Aug. 23, Wang said. Bank of China said this month its subprime losses for the six months would be ``insignificant,'' without giving details.

Six Chinese banks with shares traded in Hong Kong may lose a combined 4.9 billion yuan on subprime investments in 2007, Beijing-based Capital Week reported Aug. 12. That includes the Bank of China figure as well as an estimated loss of 103 million yuan for China Merchants Bank Co.

Shares of Bank of China have fallen 10 percent in Hong Kong during the past month as financial stocks in Asia-Pacific markets slid on concern fallout from the subprime collapse will spread.

Mitsubishi UFJ Financial Group Inc., Japan's biggest bank, fell to its lowest in almost two years today after Australian mortgage lender Rams Home Loans Group Ltd. said ``unprecedented disruptions'' in credit markets may reduce its profit. The Japanese bank said it has about 300 billion yen ($2.5 billion) of investments that incorporate subprime loans.

The MSCI Asia-Pacific Financials Index has lost 8.3 percent in the same period, the second-worst performance on the broader measure after energy shares.

Merchants Bank

Merchants Bank said yesterday it holds no investments backed by subprime loans. The nation's seventh-largest bank sold its asset-backed and mortgaged-backed securities last August after a 13.4 percent return on the investments, President Ma Weihua said.

Defaults on U.S. subprime loans are rising after originations reached a record $805 billion in 2005, according to estimates from New York-based JPMorgan Chase & Co., the third- biggest U.S. bank.

The European Central Bank, the U.S. Federal Reserve and other central banks injected $154 billion into money markets on Aug. 9 and $135.7 billion on Aug. 10 amid concern that U.S. subprime mortgage losses will curtail lending. Asian central banks haven't pumped in additional cash as there's already enough liquidity.

To contact the reporter for this story: Luo Jun in Shanghai at Jluo6@bloomberg.net

Last Updated: August 14, 2007 02:29 EDT