This is from Xinhua(China). The Global reach of the financial debacle in the US is evident. In fact some argue that the reason that the U.S. government took over Fannie Mae and Freddie Mac was to assure Asian banks that their investments were secure. I find it rather surprising that the US dollar seems to remain strong so far during all this turmoil.
Two Philippine banks set aside provisions for exposure to Lehman
www.chinaview.cn 2008-09-17 10:45:00
MANILA, Sept. 17 (Xinhua) -- The Philippines' two largest banks, Metropolitan Bank and Trust Co. and Banco de Oro, were setting aside provisions totaling 94.7 million US dollars to cover their exposure to the Lehman Brothers' collapse, reports said on Wednesday.
"Due to the uncertainty relating to the financial condition of Lehman Brothers, Banco de Oro Unibank Inc. is setting aside provisions totaling 3.8 billion pesos (80.7 million dollars) to cover its exposure to said entity," the No. 2 lender said in a disclosure to the Philippine Stock Exchange, citied by the Philippine Star.
Metrobank, the country's biggest bank in terms of assets, said it has "made provisions equivalent to 14 million dollars" for its direct bond exposure of 20.4 million dollars, according to the report.
Banco de Oro did not disclose the extent of its exposure to Lehman, only saying that its balance sheet should be "adequately covered from potential losses arising from its Lehman exposure."
The Philippine central bank BSP is ready to assist local banks that might get affected but there might be no need for such action because their exposure was small, said BSP governor Armando Tetangco.
"Our banks are benefiting from the banking reforms we've already made, particularly the increase in their capital," Tetangco said.
If things get worse, the BSP has a standing repurchase facility that troubled banks may tap to tide them over the current turmoil, said the governor.
"But its use is unlikely because there is enough liquidity in the system," Tetangco said.
"Nevertheless, we are monitoring the situation particularly for any other potential effects that may arise from recent events," he said.
The two leading banks both said they expect to be in the black at the end of the current calendar year.
Finance Secretary Margarito Teves, meanwhile, said Lehman Brothers' financial troubles could stem investment flows to the Philippines but he said the problem would be "temporary."
"There could be some risk aversion towards emerging markets, including the Philippines, due to the financial troubles of Lehman Brothers which again shook the global financial markets, but we expect this to be temporary," Teves said.
"We hope that when the global markets finally smoothen out, investors would look at the Philippines favorably given the country's resilience and stronger macroeconomic fundamentals due to the fiscal and economic reforms that we have been undertaking," Teves said.
Lehman Brothers, a U.S. investment bank with a history of 158 years, has filed the largest bankruptcy in the United States as Merrill Lynch, another giant, was bought out by Bank of America.