Asian Journal- The Filipino-American Community Newspaper

MANILA - Seven banks in the Philippines have a total of $386 million in exposure to bankrupt US investment banking giant Lehman Brothers, according to the central bank’s estimates, but the banking system is widely believed to be in a good position to withstand the world’s worst financial shake-out.

Even assuming zero recovery of their exposure to Lehman, the fallout for the seven banks is not expected to exceed one percent of their total assets.

According to estimates by the central bank, Bangko Sentral ng Pilipinas (BSP), obtained by the Philippine Daily Inquirer, the retail tycoon Henry Sy’s Banco de Oro Unibank has the biggest exposure to Lehman at $134 million, followed by state-owned Development Bank of the Philippines (DBP) at $90 million.

As a percentage of total assets of the individual banks, the exposures are as low as 0.5 percent and as high as 1.7 percent, according to the estimates, which were discussed at a meeting of the BSP policymaking body, the Monetary Board, on Thursday.

Banco de Oro, Metrobank and RCBC reported earlier this week that they had made provisions for their soured exposures to Lehman.

The BSP data show Banco de Oro had set aside a buffer equivalent to 60 percent of its exposure and Metrobank and RCBC had provided for 70 percent and 52 percent of their exposures, respectively.

DBP has put up a provision of about P3 billion for its exposure to Lehman, its spokesperson said. “So we are fully provided for,” the DBP spokesperson said. “Of our exposure, $10 million represents debt papers issued by Bank of America and arranged by Lehman, while $80 million represents notes issued by a local subsidiary of Lehman.”

Bank of Commerce president Raul de Mesa said the bank’s exposure was fully provided for. “There’s no impact on earnings this year. We’ll equal or hopefully make better than last year’s net income of P520 million,” he said last night.

Philippine Daily Inquirer sources said UCPB, a government-sequestered bank, would provide for 100 percent of its exposure to Lehman.