As Hanjin seeks rehab, BSP says PH banking system ‘strong, stable’


Posted at Jan 11 2019 08:08 PM | Updated as of Jan 11 2019 08:11 PM

MANILA—The Philippine banking system is "strong and stable," the Bangko Sentral ng Pilipinas said Friday, after Korean shipbuilder Hanjin Heavy Industries and Construction Philippines filed for voluntary rehabilitation.

Hanjin's Philippine unit sought court-assisted rehabilitation to pay 5 banks some $412 million. BDO Unibank, BPI and RCBC confirmed loan exposures to Subic Bay-based Hanjin. Metrobank and LandBank of the Philippines were also identified by a Philippine Daily Inquirer report as among 5 creditors.

The local banking industry's Capital Adequacy Ratio (CAR) of 15.35 percent as of June 2018 is "well above" international standards of 8.0 percent, BSP said in a statement.

"With its robust capitalization, the Philippine banking system is well-positioned to manage about $400 million in loan exposure to Hanjin Heavy Industries and Construction Philippines," the statement said.

"The Bangko Sentral ng Pilipinas (BSP) has been implementing strategic reforms that strengthened the industry’s risk management capabilities and improved capitalization."

Total assets of the banking system continued to grow with an 11.0 percent year-on-year rise in 2018, while non-performing loans (NPLs) remained low at 1.83 percent of its total loans as of October 2018. Domestic banks’ loan loss reserves also represented 109.9 percent of the banks' NPLs during the same period. 

The industry remains "very liquid and profitable," the BSP said.

In a separate interview, BSP deputy governor Chuchi Fonacier said the 5 banks would take collective action to cover some $412 millions in loans to Hanjin's local unit.

"The BSP is confident about the local banks’ ability to handle negotiations on this corporate restructuring while remaining compliant with prudential regulations," the statement said.