Banks shrug off franchise row

The banking industry remains strongly capitalized and in a solid liquidity position to manage credit risks

The country’s local banking system will remain strong, unaffected by the lawmakers’ decision to deny the ABS-CBN’s application to renew its franchise.

“The Bankers Association of the Philippines (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,” BAP said in a statement.

“The banking industry remains strongly capitalized and in a solid liquidity position to manage credit risks,” it added.

Deeply rooted

According to BAP, the prudential measures imposed by the Bangko Sentral ng Pilipinas have enabled the local banking industry to remain robust and healthy, enough it to withstand crises.

“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 good corporate governance,” it said.

“Most importantly, we are confident that our member banks are prudent and take the welfare of depositors at paramount importance,” it concluded.

Isolated case

Department of Finance Secretary Carlos Dominguez III earlier said that the ABS-CBN franchise issue is not an administration issue and won’t affect the entry of investments in the country.

“We have not seen any result of a slowdown in investments because of the ABS-CBN issue. We have seen a slowdown, yes, but that is essentially because of the COVID-19 (coronavirus disease) and most companies here and abroad are keeping their money in cash,” Dominguez explained.

Union Bank of the Philippines chief economist Carlo Asuncion shared the same sentiment noting the ABS-CBN issue could be an isolated case and that the country’s “structural rigidities” are what hampers the influx of more investments.

“More than anything else, structural rigidities have been hampering investments in the country for a very long time. It may be that the ABS-CBN issue is an isolated case and may not dictate future investment outlooks and looking at the bigger picture may explain the structural challenges of investments in the country,” Asuncion said.