CHINA Merchants Bank yesterday disclosed it had a large exposure to Lehman Brothers, leading to a tumble in banking shares in Shanghai as investors expressed concerns that other domestic banks may also be similarly exposed.

Industrial and Commercial Bank of China, one of the world's biggest banks by market value, yesterday also revealed that it held US$151.8 million worth of Lehman-related bonds, or 0.01 percent of the Chinese lender's total assets.

Shenzhen-based Merchants Bank said in a filing to the Shanghai Stock Exchange yesterday that it holds about US$70 million in United States-based Lehman Brothers debt securities and it will make a provision against losses and carry out a risk assessment.

The bank, which was the first domestic lender to disclose an exposure to Lehman, said it holds US$60 million in Lehman senior debt and US$10 million in subordinated debt.

Its shares plunged 9.96 percent to 14.47 yuan (US$2.11) yesterday after they have already plummeted almost 10 percent on Tuesday.

ICBC said it was considering to draw provisions for the said bonds.

Shares of ICBC lost 10 percent to close at 3.42 yuan yesterday in Shanghai.

The benchmark Shanghai Composite Index fell 2.9 percent to a 22-month low of 1,929.05 at the close yesterday.

All 14 listed domestic banks tumbled yesterday although analysts said their total exposure to the failed US investment house should be limited.

One of the biggest financial crises said to have shaken the core of Wall Street, Lehman Brothers filed for bankruptcy on Monday. Merrill Lynch managed to escape that fate by selling itself to rival Bank of America.

US authorities pieced together an emergency US$85 billion rescue of insurance company American International Group to stave off a bankruptcy that could have thrown world markets into deeper turmoil.

British bank Barclays Plc agreed to buy several parts of Lehman, which went bankrupt on Monday, for US$1.75 billion, according to several media reports.