SINGAPORE, Aug 2 (Reuters) - Credit Suisse said on Thursday that Singapore banks have a small exposure to collateralised debt obligations (CDOs), which are losing value amid concerns over the troubled U.S. subprime mortgage market.

Even if the city-state's three local banks have to book losses on their investments in CDOs, the impact on their profitability would be small, the Swiss investment bank said.

Investors fear that Singapore's DBS Group Holdings , United Overseas Bank and Oversea-Chinese Banking Corp. might have bought CDOs, securities backed by loans and asset-backed bonds, to earn higher yields.

But Credit Suisse said in a research note that the banks exposure to the CDO market was just 3-5 percent of their equity.

"Of course, there would be mark-to-market losses near term, but mostly directly affecting equity and the effect on P&L would be small," analysts Sanjay Jain and Anand Swaminathan wrote.

Credit Suisse said DBS's exposure in the CDO market was less than S$1 billion ($658 million), UOB's was S$500 million and OCBC's S$600 million.

The U.S. mortgage market has been hit with rising delinquency and default rates on subprime home loans, the riskiest segment of the housing loans market.

Rating agencies have downgraded securities like CDOs made up of various subprime mortgages, and the problems have caused some lenders and fixed-income investors to shy away from higher-risk high-return debt in general.

On Wednesday, Australia's Macquarie Bank warned that retail investors in two debt funds faced losses of up to 25 percent, making it the third Australian institution to flag losses from credit assets.

DBS Chief Executive Jackson Tai said last week that Southeast Asia's biggest bank had no material exposure to subprime mortgages in the United States.

The other two banks -- which are set to announce quarterly earnings next week -- have yet to comment on their exposure to subprime or the CDO market.

A recent report by Fitch ratings said UOB Asset Management, the fund management arm of Singapore's second biggest lender, had US$7.7 billion of CDOs under management as of May 22, 2007.

But Credit Suisse said UOB Bank's total CDO exposure was small and the credit risk of its asset management arm was not borne by the bank.