Regulatory enhancements set to shield banks from Hanjin fallout

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MANILA – Policy enhancements on banks’ capital, risk management systems and good governance, among others, will protect exposed local banks from any headwinds that may arise from the bankruptcy announcement of Hanjin Heavy Industries and Construction Philippines.

Bangko Sentral ng Pilipinas (BSP) OIC and Deputy Governor Diwa Guinigundo told the Philippine News Agency (PNA) that stricter regulations put in place in the past years will definitely lessen the impact on five domestic banks’ exposure on Hanjin Heavy Industries, which reports said amounts to USD412 million.

He said the BSP “ensured (that) the banks are adequately provisioned for any potential loan loss.”

He also noted that “ceilings were also drawn on industry exposure and single borrowers.”

“All of these regulatory reforms also contributed to the banks’ sustained liquidity and profitability,” he added.

BSP data show that the industry’s total assets as of end-October 2018 stood at PHP16.25 trillion while allowance for credit losses reached PHP196.62 billion.

Reports identified the local banks that have exposure to Hanjin Heavy Industries, which has a USD1.6 billion-shipyard in Subic Bay Freeport Zone (SBFZ), as state-owned Land Bank of the Philippines (Landbank), Yuchengco-led Rizal Commercial Banking Corporation (RCBC), Ty-led Metropolitan Bank & Trust Company (Metrobank), Ayala-led Bank of the Philippine Islands (BPI) and Sy-led Banco de Oro Unibank (BDO).

Relatively, BSP Deputy Governor Chuchi Fonacier said discussions about this issue is still at the level of banks and Hanjin, thus, she declined to talk on the specific impact on the affected banks.

“It would be still premature to discuss on the Hanjin situation since the creditor-banks are the ones handling it right now since there was a petition filed by Hanjin in court,” she told PNA.

Meanwhile, Bank of the Philippine Island (BPI) President and CEO Cezar P. Consing said the bank has enough provisioning for any loss.

“We have the provisions to take care of situations like this and have the lowest exposure among the five lenders involved,” he said in a statement Friday.

The same goes for BDO, according to BDO President and CEO Nestor V. Tan.

“We have an exposure to Hanjin and we are more than adequately provided for potential losses,” he said in a statement. (PNA)

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