MANILA - Philippine banks remain stable and largely immune from shock waves caused by the US credit crisis, economic managers said yesterday.
While the US and European governments moved to bail out troubled financial institutions, the Philippines remained basically unscathed, said Bangko Sentral ng Pilipinas (BSP) Deputy Governor Nestor Espenilla.
The business community in Cebu remains “cautious” as the United States experiences a financial crisis, said Cebu Chamber of Commerce and Industry (CCCI) president Edward Gaisano.
He said, though, that some businesses will push through with their expansion plans, which have been conceived much earlier. “(Some) have those plans for a long time,” he added.
But companies with more recent expansion plans will probably contend with higher interest rates from lenders, he said.
So far, the BSP had raised its key interest rates twice this year—a move that is expected to bring about increases in interest rates imposed by commercial banks on borrowers after a certain time lag.
Gaisano, in an earlier interview, also expressed confidence in the solvency of local banks whose exposure to ailing financial institutions in the US remains to be small.
“In the US and Europe they are talking bailout primarily because the issues there have deteriorated into solvency questions,” Espenilla told reporters.
Liquidity loans
“In the Philippines, this is not the case because our banks have no solvency issues at this time,” he said.
However, a number of Philippine banks do have some exposure to collapsed US investment bank Lehman Brothers.
Espenilla said the BSP remains committed to provide “liquidity loans” to the financial sector if needed.
“These windows are available and continue to be ready for whatever necessity arises for it,” he said.
The government’s gross financial reserves also remain intact and have not been exposed to any investment banks that have tanked in the United States, he said.
“They are very safe. The (central bank) has followed an extremely conservative policy with respect to the management of the reserves wherein safety of the principal is the overriding concern,” he said.
The United States is the Philippines’ biggest trading partner, and there have been concerns the financial turmoil could lead to slower growth for Manila’s exports.
Socio-economic Planning Secretary Ralph Recto said the country may experience some slowdown in terms of its exports.
“We are not taking out the possibility that the US will go into recession,” Recto said, but stressed macroeconomic fundamentals remained sound. (AFP)/with LAP)
