Since some banks have loans to ABS-CBN Corp., the industry as a whole remains confident that it is strong enough to withstand any impact of the network giant’s closure.
The Bankers Association of the Philippines (BAP) said on Tuesday: “The (BAP) expresses its confidence in the capacity of banks to manage their credit portfolio in relation to the non-renewal of the ABS-CBN broadcast franchise.”
ABS-CBN, a publicly-listed company, earlier disclosed that it is in debt to banks in the amount of P20.2 billion to two local banks, Union Bank of the Philippines and Bank of the Philippine Islands (BPI). The company’s loans to Union Bank amounts to P11.1 billion that will mature in 2026, and P9.1 billion to BPI to be paid by 2025.
According to BAP, whose president is BPI CEO and president Cezar P. Consing, the industry is “strongly capitalized and in solid liquidity position to manage credit risks.”
“In the midst of today’s pandemic and concerns on the non-renewal of the ABS-CBN broadcast franchise, we strongly believe that banks will continue to be steadfast as they are supported by strong financial conditions, robust risk management systems and a good corporate governance,” said BAP in its statement. “Most importantly, we are confident that our member banks are prudent and take the welfare of their depositors at paramount importance. Your deposits are protected,” it added.
ABS-CBN has been off the air since early May when the National Telecommunications Commission slapped it with a cease and desist order after its broadcast franchise has expired. On July 10, after 12 hearings, a Lower House committee junked the network's bid for a franchise renewal.
In the meantime, the BAP said “prudential measures” set by the Bangko Sentral ng Pilipinas in the past and until today has enabled them to build up a healthy capital base to withstand any systemic threats.
As defined by the BSP and the BSP-led Financial Stability Coordination Council (FSCC), systemic risks are disruptions in the financial system which can have negative consequences in the broader economy, while macroprudential policies are the interventions used by the authorities to manage these risks.
On Tuesday the FSCC released its “Macroprudential Policy Strategy Framework: The Case of the Philippines” for public use. According to BSP Governor and FSCC chairman Benjamin E. Diokno, financial stability is specifically about managing systemic risks.
“Three weeks ago, the FSCC held a press briefing with two important messages: First, that 2019 coronavirus disease (COVID-19) is different from prior crises because it is a direct shock to the real economy, to supply chains, and to the welfare of families and individuals. Second, based on our reading of a wide array of indicators and our own surveillance of what is happening on the ground,
we do not see any indications as of yet that our financial market has been impaired irreparably,” said Diokno during the FSCC online press briefing.