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First Brands faces $11.6 billion in total liabilities

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Jefferies' shares down over 18% last week

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Bank's exposure: $43 million in receivables, $2 million in

loans

(Adds details throughout, context and background)

By Devika Madhusudhanan Nair and Shubham Kalia

Oct 12 (Reuters) - US investment bank Jefferies

said on Sunday its exposure to bankrupt auto parts maker First

Brands Group is limited and any potential losses would be

"readily absorbable," as it sought to reassure investors

following a slump in its shares last week.

First Brands, which makes filters, brakes and lighting

systems for the automotive industry, filed for bankruptcy

protection last month after its lenders began investigating

irregularities in the company's financial reporting.

Last week, Jefferies disclosed that its Leucadia Asset

Management fund, through its credit fund Point Bonita, held

about $715 million in receivables linked to First Brands.

In a letter addressed to clients and shareholders and posted

publicly on Sunday, Jefferies CEO Rich Handler and President

Brian Friedman said the bank's investments in the U.S. auto

parts maker "effectively comprise" $43 million of Point Bonita's

accounts receivables from the bankrupt group and a $2 million

interest in First Brands' bank loans.

"Relative to the scale of Jefferies, we are confident that

any losses or expenses from these investments or otherwise in

respect of First Brands can readily be absorbed and do not

threaten our financial condition or business momentum," Handler

and Friedman said.

"We believe there has been an impact on our equity market

value and credit perception that is meaningfully overdone, and

we expect this to correct soon as the facts and range of

outcomes are better understood."

Jefferies' shares fell more than 18% last week.

Reuters reported on Friday that Morgan Stanley's ( MS )

asset management unit had asked Jefferies to return some money

it invested in the Point Bonita Capital fund, citing a person

familiar with the situation.

First Brands has $11.6 billion in total liabilities, while

its CEO Patrick James is considering leaving his position.

Swiss bank UBS has noted exposure of more than $500

million to the auto parts maker.

The U.S. Justice Department has launched a probe into First

Brands' dealings with creditors and sent an inquiry to the

company, Reuters reported earlier this month.