Central bank says debt of Hanjin Philippine unit to five banks not that big

January 11, 2019

The Philippines' five largest banks have an exposure of $412 million in the local unit of Hanjin Heavy Industries and Construction Philippines  but the central bank said Friday there is no need to worry. Diwa Guunigundo, Officer-in-Charge and deputy governor of the Bangko Sentral ng Pilipinas (BSP), told ANC that the exposure of the banks to Hanjin relative to the banking system is "just about 0.24 percent.' "If we are just talking of Philippine banks exposed to Hanjin, indeed, relative to total loans of the banking system, it's just about 0.24 percent. And, relative to the FCD (foreign currency deposit) loans of the banking system, it's only 2.48 percent, so very small," Guinigundo added. Gunigundo said the central bank needs ''to determine extent of the exposure'' of  the Hanjin Philippine unit. "We need to first determine the extent of the exposure. This is the exposure only to banks, but there could be other exposures. I think what we need to do is to stay on the ground and determine the actual extent of exposure," added Gunigundo. The banks which lent to the Philippine unit of  Hanjin are Banco de Oro Universal Bank, Bank of the Philippine Islands, Metropolitan Bank and Trust Co., and Rizal Commercial Banking Corp. and Land Bank of the Philippines. Subic Bay Metropolitan Authority (SBMA) chair Wilma Eisma told ANC that on top of Hanjin's loan to the banks, Hanjin has $900 million in loans from South Korean lenders. A news report said the $16 billion South Korean shipyard in Subic Bay, Zambales was reported recently to be seeking corporate rehabilitation to pay  its debts. Cezar Consing, president of the Bank of the Philippine Islands, said the banks' cooperation will create positive impact on the South Korean shipbuilder's rehabilitation. "What you have here are five banks, each with their own separate credit arrangements with Hanjin Philippines. This is not a syndicated loan. These are five separate banking relationships. Fortunately, the five banks have decided to work together. By our assessment, the assets of Hanjin PH are in excess of the liabilities. So if we work on a rehabilitation program, I think we'd be all right," Consing said in an interview over ANC. RCBC said in its statement that "the amount involved is very manageable. With the 5 creditor-banks working together and looking for an investor as one option, resolution is just a matter of time and we expect that to be sooner than later." RCBC has the largest loan exposure in Hanjin with $140 million, based on a news report. Cristina Eloisa Baclig/DMS