|
Friday, September 19, 2008
Gov't to public: Don't panic
MANILA - Malacañang asked the public on Thursday to stay calm and refrain from panicking as the Philippine shares tumbled Thursday for the third time this week following the US financial crisis.
Reports said many Filipinos are making withdrawals for fear that the crisis would affect the country.
What's your take on the Mindanao crisis? Discuss views with other readers
Executive Secretary Eduardo Ermita said making unnecessary withdrawals may result in bank holidays or even bankruptcy if the public starts withdrawing their savings in local commercial banks that have exposure to the Lehman Brothers, one of the Wall Street's oldest investment banks.
Ermita assured that any exposures of local commercial banks to the Lehman Brothers is minimal and would just end up reducing profits or net worth of local banks, if any.
He said of close to 40 commercial banks in the country, only about six have exposure to the Lehman Brothers.
Related story
Arroyo: RP to ride out financial storm
Nestor Espenilla Jr., deputy governor of the Bangko Sentral ng Pilipinas (BSP), echoed saying that they have surveyed about 60 commercials banks and came out with "less than 10 banks" that have exposure.
He said Metrobank, Banco de Oro, and Rizal Commercial Banking Corp. are among those.
Espenilla said despite this, it would not "destroy the bank" as they still have many sources and investments especially locally.
According to him, the worst that could happen is "lesser income" for the banks.
Both Ermita and Espenilla also allayed fears of a falling status of Asian International Group (AIG) after the US government had absorbed about 80 percent of the institution and infused funding of about US$85 million to ensure it stays afloat.
The collapse of the Lehman Brothers and the poor AIG's status have affected trading in the Philippine stocks which has plummet to 4.5 percent this week, a new low in a year and a half.
"When the US sneezes, we do not catch a cold, we get the flu. This is the cascading effect of the US crisis, a risk aversion of investors," said James Lago, head of research of PCCI Securities.
RCBC Securities Research head Chelsea Dipasupil said "people are expecting more (US) companies to report loses in relation to the credit crunch."
Losers overwhelmed gainers 117 to 14, while 23 stocks remained unchanged.
The most actively traded stock, Banco De Oro Unibank Inc., or BDO, gained 9.5 percent ending at P34.50.
BDO earlier disclosed it had earmarked P3.8 billion (US$80.85 million) to cover its exposure in Lehman Brothers, the US investment bank that filed for bankruptcy after choking from the credit crisis and falling real estate values.
Philippine Long Distance Telephone Co., the second most actively traded stock, fell 1.8 percent to P2,480. Property developer Ayala Land Inc. shed 4.12 percent to close at P9.30.
The country's largest lender, Metropolitan Bank & Trust Co., which also disclosed its exposure in Lehman, dropped 4.7 percent to P30.50. The bank has announced it made provisions amounting to US$14 million to cover its US$20 million bond exposure in Lehman. It also said it had a loan exposure of P2.4 billion (US$51 million) in Lehman's Philippine subsidiary.
Espenilla said it is natural for local trading to be affected by the developments in the US as investors, especially foreign ones, want to ensure and protect their investments.
He said it is hard to predict when the US would recover, but they are expecting it to happen by next year, "or hopefully earlier."
President Gloria Macapagal-Arroyo, during Thursday's Local Peace and Security Assembly at the Dakak Park Beach Resort in Dapitan City, reiterated her administration's commitment to continue the path of economic reforms and to remain vigilant against further challenges to the country's economy.
Arroyo said the government would maintain its "fiscally prudent policies" that has helped the country weather the current global crisis.
Meanwhile, former budget secretary Benjamin Diokno warned Thursday that the financial crisis now gripping the United States would have a far ranging effect on the Philippine economy if not properly handled.
Appearing before the media at the "Usaping Balita" forum in Quezon City, Diokno said the ongoing crisis in the US would further slow down our already sluggish economy till the end of 2009.
The fall of the three major financial institutions - Merrill Lynch, Lehman Brothers and insurance giant American Insurance Group - had placed the US in the worst crisis since the Great Depression that started on Oct. 29, 1929 and continued until the late 1930's.
"The fall of these major financial institutions signals that the US recession is still in the upswing," Diokno warned.
He pointed out that if major banking institutions fall, minor banks are even more vulnerable.
Diokno noted that the US recession had already affected 50 percent of the world economies, including the Philippines, a major trading partner of the US.
"The Philippines will go through long and challenging days ahead and 2009 would be a slow year. I see 2010 as the time when real recovery would be felt," he said.
However, Diokno was quick to dispel doomsday predictions about the country's economy.
"My objective assumption is that the Philippines would not go into recession, just a slowdown," he said.
At worse, he said the Philippines would post a measly 2-3 percent growth as opposed to government prediction of five percent.
The former Cabinet member of ousted president Joseph Estrada even praised President Arroyo and her team of economic advisers for assuring the people of the resiliency of the country's economy.
"In these times of crisis, the worst enemy is panic. The government's cheer leading act to encourage consumers to spend is expected as non-spending would further pull down the economy," Diokno noted.
In the meantime, he urged the government to come up with long term reforms and not just resort to patching jobs.
"Now is the proper opportunity for our government to institute long term measures so as to protect our economy from future recessions," he said. (JMR/Sunnex)
For more Philippine news, visit Sun.Star Davao. (September 19, 2008 issue)
Write letter to the editor. Click here. |
|
|
|
[return to top]
[home]
|
|
