There is a theory in finance and economics called the “Big Bank Theory” which asserts that governments — through the Central Bank or the Federal Reserve (in the case of the US) — will not allow a “big bank” to collapse because the economic impact of such occurrence will surely be great.
That was exactly the rationale behind last week’s bailout of the American International Group (AIG) by the US Federal Reserve (Fed).
At least three Philippine banks face possible loss of investments due to their exposure to bankrupt global financial services firm Lehman Brothers.
As Lehman Brothers filed for Chapter 11 bankruptcy early this week, local banks Banco de Oro (BDO), Metrobank, and Rizal Commercial Banking Corp. (RCBC) announced they have set aside provisions for possible write-downs ranging from P658 million ($14 million) to P3.8 billion ($80.7 million).
Surely the question right now on depositors’ minds: Is there a reason to panic?
It’s a sad — and scary — day for financial markets today.
Lehman Brothers, a global financial services firm operating for more than 158 years, filed for Chapter 11 bankruptcy after attempts to rescue it failed. The company went down with total debt amounting to $613 billion and losses amounting to $60 billion brought by subprime mortgage investments. More than 26,000 employees are expected to go unemployed.
And yet months ago, we thought the financial meltdown has already reached its peak when tens and thousands of employees in Citigroup, UBS, Morgan Stanley, and Siemens, among others, were laid off.
The Philippines’ largest bank, Metropolitan Bank and Trust Co. (Metrobank), is expected to offer to the public more than P10 billion worth of high-yield time deposit products after the Bangko Sentral ng Pilipinas (BSP) appoved last week the bank’s planned offering of long-term negotiable certificates of deposits (LTNCD).
What are LTNCDs?
Long-term negotiable certificates of deposits (LTNCDs) are peso-denominated negotiable certificates of deposites that usually mature after five years.
The Development Bank of the Philippines (DBP) recently issued P6.5 billion worth of unsecured and subordinated tier 2 notes with a 7.75% coupon rate.
The notes mature in 10 years but have a step-up rate on its fifth year. This means DBP can redeem the notes on the fifth year or else it will have to increase the coupon rate.
Proceeds of the debt issuance will provide working capital to the bank and also increase its capital adequacy ratios.
What is a tier 2 note?
In this day and age, can you really judge a person’s financial capability based merely on appearance?
Some staff of Banco de Oro (BDO), one of the country’s leading banks, seem to think they can.
Several PMT members narrated in the forum’s Discriminating BDO bank manager thread how they were treated differently or, worse, badly just because they visited a BDO branch with an “unprofessional” attire or look.
Yesterday I finally got hold of my UP Centennial commemorative 100-peso bank notes.
In celebration of the centennial of the University of the Philippines, the Bangko Sentral ng Pilipinas printed limited copies of P100 bills with an overprint of the UP Oblation, the symbol of the country’s premier state university, to the right of former Philippine Pres. Manuel Roxas.
A Philippine Daily Inquirer article reported that the Philippine National Bank (PNB) has been implementing a “no maintaining balance” policy for overseas Filipino workers (OFWs) and their dependents since 2007.
