Thursday, September 18, 2008

Philippine Banks Exposure to Lehman Brothers

The financial world has been rocked in the past few days due to the bankruptcy of the 158 year old company Lehman Brothers, ending with a total debt of $613 billion. Their demise has sent shock waves to the global financial market and has sent stock markets all across the region tumbling down. While there is no doubt that the stock prices will recover again given due time, the bigger question is what effect does this have on the Philippine financial banking institutions?

The good news is that most of the banks exposed to Lehman’s are the big banks, like Metrobank, RCBC and BDO who can easily survive this exposure and by immediately coming out and declaring how much of their funds are exposed to Lehman’s, they have prevented unwarranted speculations that may lead to fear and panic among our local bank’s depositors. But it does not look good for their bottom line despite the press release that this will have minimal effect on their income. I work in a bank and trust me, it’s actually worse than what their PR folks are trying to paint. But their depositors should not worry about anything despite the billions of pesos of the banks money exposed to Lehman’s because they have sufficient cash to absorb this loss and remember that these exposures are not 100% uncollectable. They will still get something but at a heavily discounted rate.


Anonymous said...

one thing is clear after those financial tidal waves, and that is big is no guarantee. in fact, those banks that fell to its knees were not only big, but enormous. so philippines banks are not lucky/invincible because they're big, but because they're relatively prudent.

MMA Gear said...

well lehman brothers just vanished