(AFP) – Sep 16, 2008
MANILA (AFP) — Top Philippines lenders Banco de Oro and Metrobank said Tuesday they were setting aside provisions totalling 94.7 million dollars to cover their exposure to the Lehman Brothers' collapse.
The central bank meanwhile offered emergency lending but its governor Amando Tetangco said the local banking system did not need it since it had enough liquidity and improved capital bases.
"Due to the uncertainty relating to the financial condition of Lehman Brothers, Banco de Oro Unibank Inc. is setting aside provisions totalling 3.8 billion pesos (80.7 million dollars) to cover its exposure to said entity," the number-two lender said in a disclosure to the Philippine Stock Exchange.
Metropolitan Bank and Trust Co. (Metrobank), the country's number-one lender in terms of assets, said it has "made provisions equivalent to 14 million dollars" for its direct bonds exposure of 20.4 million dollars.
It told the exchange Metrobank had separately lent a Lehman subsidiary in the Philippines 2.4 billion pesos.
"The loan status is current and the company is in normal operations," it said.
Banco de Oro did not disclose the extent of its exposure to Lehman paper, saying only that its balance sheet should be "adequately covered from potential losses arising from its Lehman exposure."
"The provisions will come from reallocation of excess reserves and from additional provisions in the current period," it said.
Central Bank of the Philippines governor Tetangco said earlier Tuesday that a number of Filipino banks have a limited exposure to Lehman Brothers.
Tetangco said "our banks are benefiting from the banking reforms made, particularly the increase in their capital which is meant precisely to improve banks' capacity to absorb shocks like this one as well as better risk management," Dow Jones Newswires reported him as saying.
"The (central bank) has a standing (repurchase) facility which can be used by banks that may need funds, although its use is unlikely as there is enough liquidity in the system," he added.
"Nevertheless we are monitoring the situation particularly for any other potential effects that may arise from recent events," Tetangco said.
Both Banco de Oro and Metrobank said they expect to be in the black at the end of the current calendar year.
Metrobank, with a market capitalisation of 66.9 billion pesos, ended 10.8 percent down to 33 pesos.
Banco de Oro, capitalised at 89.8 billion pesos, closed 15.4 percent down to 33 pesos.
Meanwhile, the Philippine American Life and General Insurance Co., or Philamlife, said Tuesday it is insulated from the financial difficulties of its major shareholder, American International Group Inc. (AIG).
"While AIG is our parent company, we are separately capitalised ... the largest and strongest capital base of any insurance company in the Philippines," Philamlife president and chief executive Jose Cuisia said in a television interview.
"There is no impact of what's going on in the US on the Philippine operations. Most of our investments are in government securities and prime equity blue-chip stocks, local stocks not US stocks," said former central bank governor Cuisia.
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