Banks to survive Hanjin loans’ write-off–BSP

THE Bangko Sentral ng Pilipinas (BSP) released a new statement on Wednesday, saying local banks passed their stress test should their exposure to the troubled Hanjin Heavy Industries and ConstructionPhilippines (HHIC-Phil) be declared uncollectable.

“...based on the results of the BSP’s stress-testing exercise, an assumed write-off of the loan exposures to Hanjin will have minimal impact on the industry’s CAR [capital adequacy ratio],” the statement read.

The Central Bank noted that the local banking industry is “well-capitalized,” with a capital adequacy ratio of 15.36 percent as of September 2018, well above the international standard of 8 percent and the BSP’s regulatory requirement of 10 percent.

“More important, as part of the supervisory process, the BSP requires banks to stress test their own loan portfolios. In this respect, banks should have the capability to promptly address threats and stress scenarios,” the BSP said.

The BSP, however, reiterated their continued vigilance in monitoring the actions taken by the banks and ensure the orderly resolution of the Hanjin case.

In a separate release, the Investor Relations Office (IRO) also said that the rising foreign direct investments (FDI) directed toward Subic may address the employment concerns rising from Hanjin’s closure.

“Unemployment that may result from Hanjin PH’s bankruptcy may be mitigated by the number of total approved foreign investments in the Subic Bay Metropolitan Authority [SBMA],”the IRO said in a statement on Wednesday.

IRO cited data from the Philippine Statistics Authority (PSA), noting an 83.4-percent rise in the number of approved foreign investments in SBMA from P428.8 million in the JanuarySeptember 2017 period to P786.6 million in January-September 2018.

According to the IRO, 2,493 jobs are expected to be created out of these approved investments for Subic, supporting employment resiliency in the region.

“While Hanjin PH’s closure comes with some challenges, it remains a non-systemic event as substantiated by data from the Bangko Sentral ng Pilipinas,” IRO said.

“Overall, there is optimism that the government’s commitment to present reforms—particularly its ‘Build, Build, Build’ agenda, which will bring about job creation and investment growth, tax reform, and ease of doing business initiatives—keeps the Philippine on track as one of the fastest-growing economies in the fastest-growing region of the world,” it added.

South Korean shipbuilder Hanjin’s Philippine subsidiary filed for corporate rehabilitation at the Olongapo Regional Trial Court last week, seeking protection from its creditors as it struggles to pay its loans totalling $412 million to five of the country’s leading banks.