A senior Philippine central banker on Friday played down the risk to the banking system posed by devastating floods, saying just over 100 million dollars in loans might have to be restructured.
Dow Jones Newswires earlier Thursday quoted the official as saying about half a trillion pesos (10.7 billion dollars) in loans may be at risk from defaults due to Tropical storms Ketsana and Parma. But the official later said he was misquoted.
The storms probably affected about 500 billion pesos in loans out of the Philippine banking system’s total loan portfolio of about three trillion pesos, the central bank said.
But just one percent of the storm-exposed loans are likely to require restructuring, notably loans made to farmers whose crops have been wiped out, said Nestor Espenilla, the central bank deputy governor for supervision and examination.
“While five billion pesos (107.62 million dollars) is not a small amount, we believe it is not going to pose a systemic risk,” Espenilla said in a statement.
Tropical Storm Ketsana killed 337 people as floods swamped 80 percent of Manila on September 26, while Typhoon Parma has so far killed 181 people in the north.
The Manila region accounts for a third of the country’s economic output. Espenilla said the central bank had already addressed the difficulties caused by the storms with a raft of temporary relief measures for banks announced last week.
Meanwhile, the Philippine insurance industry expects to get hit with 11 billion pesos in non-life claims from devastating floods caused by Ketsana alone, Philippine Insurers and Reinsurers Association general manager Mario Valdez said.
Ketsana was probably the costliest natural disaster to hit the country since the 1991 eruption of Mount Pinatubo, Valdez told AFP. The industry did not have any immediate estimates for potential claims from Parma.
With AFP – MANILA, Oct 9, 2009
