Central bank says lenders' exposure to Hanjin 'negligible'

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Metro Manila (CNN Philippines, January 11) — The Bangko Sentral ng Pilipinas (BSP) on Friday allayed fears about the fallout from the financial troubles of Hanjin Heavy Industries and Construction (HHIC) Philippines which has filed for corporate rehabilitation.

BSP Officer-in-Charge Diwa Guinigundo said the combined exposure of Filipino banks is "very negligible" in relation to the total loans in the banking system and total foreign currency deposit unit loans (FCDU).

"Our banks as a whole are very strong and more than adequately capitalized.  Their assets continue to grow and the quality of their loans based on non-performing loan ratio is less than two percent," Guinigundo said in a statement.

Guinigundo said five Philippine banks have  $412 million in combined loans to the shipbuilding firm.  These are BDO Unibank, Landbank of the Philippines, Rizal Commercial Banking Corporation, Metrobank, and the Bank of the Philippine Islands (BPI).

He noted that these banks have risk management systems in place, and their loan loss provisioning is more than 100 percent. 

BPI President and CEO Cezar Consing said the banks are working together to work on Hanjin's rehabilitation program.

"The five banks decided to hold hands and work together. Based on our initial assessment, the assets of Hanjin Philippines are in excess of the liabilities. If we can work on a rehabilitation program.  It will be alright," Consing told CNN Philippines.

In an ambush interview, Trade Secretary Ramon Lopez also assured that there was no need for the government to bail out the Korean conglomerate's local arm.

"We're not in that business.  It's not in our policy to get into that business but there are a lot of private companies wanting to get in," he noted. 

Hanjin Philippines filed for voluntary rehabilitation on Tuesday following a slowdown in the global shipping industry. The court will assist Hanjin in restructuring and handling of its assets so the troubled company can pay off its debts.

READ: Some 3,000 workers of Korean shipmaker Hanjin may face layoffs after firm files for rehab