BSP looking into Hanjin supplier woes

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The monetary authorities on Friday bared looking past the various lenders of the financially distressed shipbuilder Hanjin Phililippines and on to its suppliers to determine the full extent of its woes.

This was bared by Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo in a broadcast interview in which he stressed the impact of the shipbuilder’s problems was not limited to the five local banks that lent it money but to other economic actors such as the pool of suppliers making possible the manufacture of very large ships, for instance.

According to Guinigundo, the BSP has since mobilized a team looking into the extent of the financial details not just of the banks with a combined loan exposure of some $412 million in Hanjin Philippines but of the pool of suppliers who also have financial relations with the various lenders.

He would not dwell on the details of the inquiry at this point, saying there is an ongoing petition at the Regional Trial Court of Subic to allow the distressed shipbuilder to undertake a financial rehabilitation program.

Guinigundo stressed Hanjin Philippines petitioned the court for a corporate rehabilitation program, effectively asking to provide the shipbuilder the judicial support it needs to handle the various issues with the creditor banks.

According to him, the exposure of the individual banks to the financial unravelling of the shipbuilder was negligible.

He said the lending banks’ exposure relative to aggregate loans in the financial system was a mere 0.24 percent.

In relation to loans obtained from the banks’ foreign currency deposit units or FCDU, the five individual loans equal only 2.48 percent.

“We are saying this is an issue that cannot (harm) the financial system,” the deputy BSP official said.

Cezar Consing, president and chief executive officer at the Bank of the Philippine Islands, one of five lenders that extended loans to Hanjin Philippines, said if all five lenders can work out an acceptable financial rehabilitation program, then the Ayala-owned lender should prove ok.

“We are talking all kinds of alternatives now,” he acknowledged in a broadcast interview.
Like Guinigundo, he refused to go into specific plans but said all five lenders are trying to do what is best for Hanjin Philippines and some 30,000 Filipinos it employs.

According to Consing, Hanjin Philippines, reputed as the fourth largest shipbuilder in the world, had been a good account for a very long time.

But “we’ll do what is best for the bank” as well, he quickly added.

He brushed aside concerns the Hanjin exposure would have an adverse impact on BPI’s financial standing, saying the percentages involved in the unfloding saga are “small relative to the size of the financial system.”

Consing said the banks’ capital structure, for instance, is twice as large at present than it was 11 years ago when the US investment banking firm Lehman Brothers went under the weight of the global financial crisis at the time.

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