The casualties of the Lehman collapse are popping up, one by one.
First, the Philippine economy. Socioeconomic Planning Secretary Ralph Recto now has a worst-case scenario forecast of 4.7 percent to 5.5 percent for gross domestic product for the year, down from an already revised 5.5 percent to 6.4 percent.
You know already that two of the nation’s biggest lenders, Metropolitan Bank & Trust Co. and Banco De Oro have hits on their portfolio. Rizal Commercial Banking Corp. (RCBC) today also revealed its exposure to Lehman. Together, the three banks have set aside $120 million in provisions—meaning there’s cash made available for any write down in the future.
All in all, the central bank says the total exposure of the banking system is 0.3 percent to 0.4 percent of the banking system’s total assets. That’s around P15 billion, but one industry estimate says the exposure could go up to as high as P23 billion. Not worrisome, says the central bank. The amount may look huge, but it will not drive banks to suffer any liquidity problems, it says. Worst thing that can happen is some erosion in net incomes. We can only wait for reality to unfold–and hold our breaths.
Are depositors panicking? I don’t see any lines, thank heavens. Whether that’s because Filipinos are not worried or they don’t understand what is happening, I don’t know. In this case, ignorance can bring about bliss.
Those who do not have exposures and are confident enough to come out and say it are: Sun Life’s Philippine unit (it’s the mother company that has exposure), Bank of the Philippine Islands, Union Bank of the Philippines, Government Service Insurance System and Social Security System.
Those who would like to know how the subprime crisis began might want to read Reyna Elena’s blog here.
And if you are wondering what the ultra rich are doing these days, they are paying $970,000 for a contemporary oil painting of kitchenware by Indian artist Subodh Gupta. Sigh. Wouldn’t you like to be filthy rich in this day and age?
September 17th, 2008 at 10:31 pm
In a nutshell, I believe that Lehman, AIG and ML were able to be off radar screens for quite awhile because they were waiting for the US real estate market to pick-up. Unfortunately, we are still in the doldrums.
Question becomes: how many AIG and ML’s are still out there?
You really cannot expect these investment companies to police themselves and I don’t think they will because they were in a way a victim of the subprime as well, although, they should have done some bloody deep due diligence when they bought their investments. But then again, how could you when most of these MBS are so intricately woven into fancy named “funds” that you can no longer find which is which until you realize that your investment receivables are useless.
It’s a tough job for US regulators to catch them before they fly the white flag. I’m sure, there are still investment companies our there, hiding in the dark, with all their useless MBS.
Thank you for the mention friendship! Hahaha!