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BSP’s Guinigundo downplays loan exposure of 5 banks

Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo on Friday downplayed any significant impact from the loan exposures of some banks to Hanjin Heavy Industries and Construction Company Philippines after the shipbuilder filed for corporate rehabilitation with the Olongapo Regional Trial Court.

Guinigundo said in a text message to reporters the banks’ exposures were “very negligible.”

“We received report that Hanjin filed for corporate rehabilitation at the Olongapo Regional Trial Court on Jan.8, 2019. Beyond this, it would be most premature for the BSP to comment on a matter pending with the court,” Guinigundo said.

BSP Deputy Governor Diwa Guinigundo
BSP Deputy Governor Diwa Guinigundo
“Based on our initial assessment, some banks are exposed to Hanjin but relative to both total loans of the banking system and total FCDU [foreign currency deposit unit] loans of the banking system, their exposure is very negligible,” he said.

He said Philippine banks as a whole were very strong and more than adequately capitalized and that their assets continued to grow and the quality of their loans based on non-performing loan ratio was less than 2 percent.

“The banks in compliance with the BSP’s regulations have risk management systems in place, they are very liquid and their profitability has been sustained. Their loan loss provisions is more than a hundred percent,” Guinigundo said.

Reports on ABS-CBN Friday said five universal and commercial banks—Rizal Commercial Banking Corp., Land Bank of the Philippines, Metropolitan Bank & Trust Co., Bank of the Philippine Islands, and BDO Unibank Inc.—seeking to cover some $412 million in combined loans to Hanjin were looking at “all kinds of alternatives,” including talking to strategic investors.

Reports said RCBC had the biggest loan exposure to Hanjin of $140 million, followed by Land Bank, $80 million; Metrobank, $72 million; BPI, $60 million; and BDO, $60 million.

BPI president Cezar Consing said the banks were in close contact with one another “will do what’s best for the banking industry and for the country.”

“This is something that the banks can handle. We have provisions for this sort of thing,” Consing told ANC. He said BPI had the smallest exposure to Hanjin compared with the other creditors.

Guinigundo said the Bangko Sentral was in contact with the five banks and “in due time, appropriate announcements will be made,” Guinigundo told ANC.

“What we need to do is stay on the ground and determine the actual extent of the exposure,” Guinigundo said, adding the rehabilitation could also affect Hanjin’s suppliers and other business linkages.

BDO president and chief executive Nestor Tan said in an emailed statement to reporters the bank, the largest in the country in terms of assets, would not be impacted by its exposure to Hanjin.

“We have an exposure to Hanjin and we are more than adequately provided for potential losses,” Tan said.

Topics: Bangko Sentral ng Pilipinas , BSP Deputy Governor Diwa Guinigundo , Hanjin Heavy Industries and Construction Company Philippines
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