Han­jin loan ex­po­sure to hurt, but not crip­ple banks — DOF

The Philippine Star - - BUSINESS - By MARY GRACE PADIN

The Depart­ment of Fi­nance (DOF) has ex­pressed con­fi­dence there will be no sig­nif­i­cant im­pact on the sta­bil­ity of five banks due to their P21 bil­lion loan ex­po­sure to Han­jin Heavy In­dus­tries and Con­struc­tion Philip­pines (HHIC) af­ter the ship­builder filed for cor­po­rate re­ha­bil­i­ta­tion last week.

“It’s go­ing to hurt, but it’s cer­tainly not go­ing to end up ham­per­ing them,” Fi­nance Sec­re­tary Car­los Dominguez told re­porters when asked on the im­pact of Han­jin’s debt de­fault to the five in­volved banks.

The fi­nance chief has not in­di­cated yet if the gov­ern­ment would help in at­tract­ing new in­vestors for Han­jin, but said banks, which in­clude state-run Land Bank of the Philip­pines, have agreed to work to­gether to re­cover their loan ex­po­sure.

“We don’t know yet. We’re not the lead bank. The lead bank is RCBC (Rizal Com­mer­cial Bank­ing Corp.). We will work along with all the other banks,” Dominguez said.

“The real im­por­tant thing is what are the prospects in that in­dus­try? Are there good prospects in the in­dus­try?” he said.

HHIC, the big­gest for­eign in­vestor and top em­ployer at the Su­bic Bay Freeport, filed on Tues­day last week a pe­ti­tion for re­ha­bil­i­ta­tion at the Olon­gapo City Re­gional Trial Court af­ter de­fault­ing on over $400 mil­lion loans owed from lo­cal banks, on top of an­other $900 mil­lion in debts with lenders in South Ko­rea.

The coun­try’s largest banks BDO Uni­bank, Metropoli­tan Bank & Trust Co., Land­Bank, Bank of the Philip­pine Is­lands, and RCBC have a com­bined ex­po­sure of more than P21 bil­lion in HHIC.

For his part, Land­bank pres­i­dent and chief ex­ec­u­tive of­fi­cer Alex Bue­naven­tura has ex­pressed con­fi­dence that the bank can cover its $85 mil­lion loan ex­po­sure to HHIC, given that the as­sets weigh higher than the li­a­bil­i­ties.

“We’ll have to ad­dress the prob­lem. But the good news is we can re­cover the as­sets. The ship­yard is worth $1.2 bil­lion and the to­tal ex­po­sure of the cred­i­tors is $400 mil­lion. Down the road, we hope to re­cover our ex­po­sure,” Bue­naven­tura said.

The Land­bank chief said that Han­jin would be deemed at­trac­tive by in­vestors, given the im­por­tance of the ship­ping in­dus­try in the global econ­omy.

“The ship­ping in­dus­try is a very im­por­tant in­dus­try sup­port­ing global devel­op­ment. The only prob­lem with Han­jin is the shipbuilding in­dus­try en­coun­tered a big prob­lem. But the global econ­omy is im­prov­ing. There’s a lot of mov­ing goods through ships,” he said.

Ear­lier, Bangko Sen­tral ng Pilip­inas of­fi­cer-in-charge Diwa Guini­gundo said the P21 bil­lion ex­po­sure of big banks to HHIC is “very neg­li­gi­ble.”

He said the ex­po­sure of Philip­pine banks to HHIC only rep­re­sents 0.24 per­cent of the to­tal loans and 2.48 per­cent of the to­tal for­eign cur­rency de­posit unit loans of the bank­ing in­dus­try.

Fur­ther­more, Guini­gundo said Philip­pines banks are well cap­i­tal­ized with a cap­i­tal ad­e­quacy ra­tio of be­tween 15 and 16 per­cent, while their non-per­form­ing loan ra­tios re­main below two per­cent.

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