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MANILA – Philippine banks’ exposure to their European counterparts has fallen to negligible levels, according to the Bangko Sentral ng Pilipinas, which said Greece’s exit from the euro zone would result in minimal losses if any for local lenders.
BSP Governor Amando M. Tetangco Jr. said local banks’ combined exposure has been reduced to 1.2 percent of their total assets at end-2011, from 2.9 percent at the start of last year.
“Local banks have actually lightened up on their exposure. The exposure of Philippine banks to Europe is 1.2 percent of total assets. It is diminishing,” Tetangco told reporters.
Given combined assets of P7 trillion, the current exposure of Philippine banks to the euro area would amount to P849 billion.
“And we've already seen that Philippine banks have not been affected by the developments of banks in Europe. Our banks have continued to be stable and remain able to perform well in terms of asset growth, profitability, asset quality,” Tetangco said.
The BSP chief said Europe is the source of 16 percent of remittances to the Philippines, and of 12 percent of export receipts.
“But having said that, we don't believe there's going to be a collapse of the European economy. There will be hiccups here and there but the core economies are still doing relatively well, like Germany for instance. It's really the peripheral countries that are at greater risk,” Tetangco said.
Earlier, the World Bank said a one percent reduction in the EU’s economic output resulting from its member-nation’s debt woes would lead to a 0.74 percent cut in the Philippines’ gross domestic product.
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