By Lee C. Chipongian
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo said they are looking into the extent of local banks’ exposure in shipbuilder Hanjin Heavy Industries and Construction which has filed for debt restructuring of its $412-million loans.
Guinigundo, who is currently governor-in-charge, said that they received the report of the January 8 corporate rehabilitation at the Olongapo Regional Trial Court but that “beyond this, it would be most premature for the BSP to comment on a matter pending with the court.”
But, Guinigundo assured the public — particularly depositors of the involved local banks — that after initial assessment, the banks’ exposure is “negligible.”
He said “some banks” with lending to Hanjin “relative to both total loans of the banking system and total FCDU (foreign currency deposit unit) loans... their exposure is very negligible.”
The BSP official said the banking system is strong liquidity-wise and have shored up reserves for any risk-related issues.
“Our banks as a whole are very strong and more than adequately capitalized, their assets continue to grow and the quality of their loans based on non performing loan ratio is less than two percent,” stressed Guinigundo.
He also said that Philippine banks – especially the 44 large banks — are strictly “in compliance with the BSP’s regulations” and that they have “risk management systems in place (and) are very liquid and their profitability has been sustained.”
“Their loan loss provisioning is more than a hundred percent. They can very well handle and manage this specific case,” Guinigundo added.
The five banks with loans to Hanjin are BDO Unibank, Inc., Metropolitan Bank and Trust Co., Bank of the Philippine Islands, Rizal Commercial Banking Corp. and the only government-owned Land Bank of the Philippines.
BDO president and CEO, Nestor Tan, said they are stable enough to deal with the problematic loan. “We have an exposure to Hanjin and we are more than adequately provided for potential losses.”
The Ayala-controlled BPI, in the meantime, said that they have adequate “provisions to take care of situations like this and have the lowest exposure among the five lenders involved.”
As for RCBC, the bank said the “amount involved is very manageable and the borrowing company’s business is actually very attractive with a lot of potential.” It added that with the “five creditor-banks working together and looking for an investor as one option, resolution is just a matter of time and we expect that to be sooner than later.”
The BSP is watching the situation carefully to ensure potential crisis that could crack the country’s financial stability would be nipped in the bud, and that there will be no ensuing system risks.
Metrobank said its exposure in the South Korean shipbuilder is only 0.13 percent of its total assets.
This is a manageable level, it said in a statement. “We are working together with peer banks and the client towards a rehabilitation plan acceptable to all. Once completed, the public will be apprised,” it added.