Hanjin fallout: BDO,Metrobank, BPI, RCBC book massive impairment losses on sunken shipbuilder

by Bilyonaryo, 21 Aug 2019

Four of the country’s biggest banks were forced to book massive impairment losses after the bankrupt Hanjin Heavy Industries and Construction Philippines defaulted on their combined $412 million loans.

The country’s biggest bank, BDO Unibank Inc., reported in its second quarter report to the Securities and Exchange Commission: “The bank prudently set aside P3 billion a provision for impairment losses for the first half of the year.” It did not say how much of the losses were attributable to its exposure in Hanjin.

Metropolitan Bank and Trust Co. (Metrobank), the country’s No. 2 bank, booked a total of P3.468 billion in credit and impairment losses as of June 30 this year, up 102 percent from P1.744 billion as of end-March.

Metrobank did not say how much of the losses were attributable to its exposure in Hanjin.

Bank of the Philippines Islands ((BPI), the country’s fourth largest bank, reported in its second quarter report that “impairment losses increased P550.66 million, or 48.8 percent, on additional provisioning
for Hanjin.” The bank pegged its total impairment losses at P3.48 billion as of end June 2019 “which includes specific reserves for Hanjin.”

Rizal Commercial Banking Corp. (RCBC), the country’s No. 10 bank, reported P2.684 billion in impairment losses in the first six months this year, up by 264 percent from P737 million during the same period
last year. RCBC did not indicate how much of the losses were attributable to Hanjin.

RCBC reportedly has the biggest loan to Hanjin Philippines with $140 million followed by the $80 million loan to state-owned Land Bank of the Philippines (Landbank).

Metrobank has a $72 million BDO and BPI had $60 million each.

Following a February 18 meeting of Hanjin creditors at the Korea Development Bank (KDB) headquarters, Business Korea news portal reported that Philippine banks agreed to swap $147.63 million or 36 percent of their $407.62 million loans to Hanjin Philippines for a 20 percent equity stake in Hanjin Heavy. The remaining 64 percent thee banks’ loans will be converted into an equity stake in Hanjin Philippines.