Bear Stearns Says Its Private Equity Arm Has No Subprime Exposure

Bear Stearns said Wednesday its private equity arm has no exposure to the two hedge funds in trouble due to losses in subprime mortgages.

"We would like to assure shareholders that Bear Stearns Private Equity Limited is not invested in these hedge funds and is managed and administered by a separate investment team," the private equity company said in statement to the London Stock Exchange.

Bear Stearns Private Equity also said it has no direct subprime exposure and, to the best of its knowledge, its private equity holdings have no indirect exposure to the risky lending market.

"Bear Stearns' franchise is sound," the company said. "Since its founding in 1923, Bear Stearns has weathered many market ups and downs, the current situation included."

The company said it "remains proud of its history of more than 80 years of profitability and the franchise is sound."

The problems facing Bear Stearns' hedge funds were triggered by a small markdown in some of the funds' holdings, which became amplified because of the funds' massive borrowing, market sources have told CNBC on Tuesday.