Philippines

Airline maintenance provider Lufthansa Technik Philippines (LTP) will lay off 300 employees in April due to the impact of the COVID-19 pandemic on the airline industry that forced some of its clients into bankruptcy, The Star reported. "This decision comes after careful study and consideration of the business situation as a result of the pandemic, its effects on the aviation industry," LTP president and CEO Elmar Lutter said in a letter to employees dated Feb. 11.

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The Philippine Treasurer Rosalia de Leon said that the government is seeking a new 540 billion-peso ($11.2 billion) loan from the central bank to aid in pandemic relief measures, Bloomberg News reported. The request for a new loan was transmitted to the central bank after the government repaid its previous debt of the same amount due on Tuesday, de Leon said. This is the third time that the government has requested support from the Bangko Sentral ng Pilipinas. The monetary authority extended advances of 300 billion pesos in March and 540 billion pesos in October.
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A Philippines-based firm seeking to recapitalise the insolvent and in-receivership Australia-listed Asian casino operator Silver Heritage Group Ltd, is said to have obtained from Australia’s Foreign Investment Review Board, a “letter of no objection” to the Philippine firm acquiring – via a subsidiary – a 92-percent interest in the casino firm, GGRAsia reported. The news was given in a Wednesday filing to the Philippine Stock Exchange by DFNN Inc. The latter company is said to own 18.98 percent of HatchAsia Inc, the firm seeking to recapitalise Silver Heritage.

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The full extent of the coronavirus pandemic-inflicted damage on Philippine companies and the local financial system will only begin to manifest itself over the next couple of years, as there is always “a lag time before you see the dead bodies,” INQUIRER.net reported. As such, banks and their large corporate borrowers will likely need to enter into contentious and difficult negotiations in the medium term to rehabilitate loans that would otherwise go into default as a result of the ongoing public health crisis. “[Banks’] problem loans have almost doubled in July. Was that the peak?

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BDO Unibank Inc., the Philippines’ largest lender by assets, posted its first loss in more than a decade after bolstering provisions for bad loans due to the pandemic, Bloomberg News reported. The bank said its net loss totaled 4.48 billion pesos ($91 million) in the three months ended June, compared with profit of 10.4 billion pesos a year earlier. It booked provisions of 22.4 billion pesos in the first half, in anticipation of potential delinquencies stemming from the coronavirus pandemic.

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Banks Eye Hanjin PH Debt Resolution

Local bank creditors of Hanjin Heavy Industries and Construction Philippines (HHIC-Phil), the local unit of Korea’s shipbuilding giant Hanjin, expect resolution of the shipbuilder’s debt within the year. The local Hanjin owes five local banks a total of $412 million, considered as the biggest corporate default in the country, the Manila Bulletin reported. Among the creditor banks, Rizal Commercial Banking Corp. (RCBC) has the biggest loan exposure of $140 million followed by state-owned Land Bank of the Philippines with an estimated $80 million.

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The Court of Appeals (CA) has directed the Philippine government to proceed with the payment of P3.9 billion in pension benefits to retired members of the defunct Integrated National Police (INP), The Philippine Star reported. In an eight-page decision issued last Dec. 12, the Special 14th Division of the appellate court ordered the full implementation of a 2016 CA decision for the release of benefits to the INP retirees by the Philippine National Police (PNP) and Department of Budget and Management (DBM).
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Rodrigo Duterte was sworn in as Philippine president more than two years ago on a promise to be different from his predecessors. Like them, however, he is proving vulnerable on inflation and that will prove a challenge for his legislative agenda, the Financial Times reported. FTCR’s Economic Sentiment Index for the Philippines dropped to 48.9 in the second quarter, marking the first time consumers have turned pessimistic since the fourth quarter of 2015, and since Mr Duterte took office in June 2016.
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