Banks can handle Udenna loan payment issues – BSP – Manila Bulletin

The Bangko Sentral ng Pilipinas (BSP) played down the impact of a possible default by Davao-based businessman Dennis Uy’s big borrower Udenna Group on the banking system, saying the banks involved such as BDO Unibank Inc. can take care of it.

BSP officials said on Saturday July 23 that all financial institutions supervised by BSP (BSFI) that lent the money to Udenna are well capitalized and are liquid banks. These banks are also able to absorb potential losses in the event of default.

“Based on the most recent data, OSFI’s overall exposure to Udenna Group was minimal at 0.83% and 0.45% of the total loan portfolio and total assets of the Philippine banking system, respectively,” according to the Governor of the BSP, Felipe M. Medalla.

BSP/Reuters building and logo
Udenna Corporation

These figures are as of March 31. Compared to end-December data, the bank’s own exposures to Udenna have even decreased since as of December 31, 2021, the consortium banks’ total loan to Udenna was 0.9% of the industry portfolio and 0 .5% of total. borrowing from the system, said BSP Deputy Governor Chuchi G. Fonacier, who heads the central bank’s banking supervision unit.

“The capital levels of the lending banks remain sufficient to absorb any losses resulting from exposure to loans from the Udenna group,” Fonacier said.

In an official statement Saturday in response to a report by the Philippine Daily Inquirer, Udenna said it had received a “notice of declaration of default” from a consortium of banks led by BDO as majority lender against Clark Global City Corp. (CGDC) which is developing a $5 billion Clark Global City project.

Udenna said the default issue was based on “continuing and irrecoverable default events” according to BDO. This is the master lease agreement between Clark International Airport Corp. (CIAC) and Global Gateway Development Corp. (GGDC).

Udenna said she had contacted the BDO-led consortium of banks and disputed their conclusion.

He said that under the circumstances, “there was in fact no event of default or at the very least, no irremediable event of default” under the lease agreement on the part of CGDC from GGDC.

“GGDC and CIAC are working on an amicable resolution that will not result in any breach of the master lease agreement,” Udenna said. “We hope we have been able to clearly state our position on the matter,” he added in his statement.



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