Metro Manila (CNN Philippines, July 14) – A group of local banks sought to calm market concerns regarding their loan exposures to ABS-CBN, saying the industry was strong enough to weather the potential impact of the network’s shutdown.

In a statement, the Bankers Association of the Philippines expressed confidence in the capacity of local players to manage their portfolios following the denial of the legislative franchise of ABS-CBN, the country’s biggest media network.

“The Bankers Association of the Philippines expresses its confidence in the capacity of banks to manage their credit portfolio in relation to the non-renewal of the ABS-CBN broadcast franchise,” the group said on Tuesday.

According to September 2019 financial statements, ABS-CBN had outstanding loans worth ₱27.1 billion, which are owed to multiple institutions.

The network borrowed from the following firms, as listed in the quarterly report: BDO Unibank, BDO Unibank – Trust and Investment Group, Bank of the Philippine Islands, Insular Life Assurance Company, Philippine National Bank, PNB Life Insurance (now Allianz PNB Life), and Security Bank which extended a ₱10-billion syndicated loan in 2010; the Philippine American Life and General Insurance Company; and the Union Bank of the Philippines.

ABS-CBN said it was compliant with the terms of its loan agreements as of end-September.

For its part, the BAP said the industry remains liquid and armed with enough capital to manage credit risks, adding that regulatory caps set by the central bank provide ample buffers during possible episodes of a crisis.

“In the midst of today’s pandemic and concerns on the non-renewal of the ABS-CBN broadcast franchise, we strongly believe that banks will continue to be steadfast as they are supported by strong financial conditions, robust risk management systems and a good corporate governance,” the BAP added. “Most importantly, we are confident that our member banks are prudent and take the welfare of their depositors at paramount importance. Your deposits are protected.”

On July 10, the House Committee on Legislative Franchises voted to deny the Kapamilya network’s bid for a new 25-year franchise after a series of hearings into supposed issues lodged against the media giant. Prior to this, the network has stopped its usual TV and radio broadcasts since May 5 due to an order from the National Telecommunications Commission after its existing franchise expired.

ABS-CBN shares have been placed on a trading halt since Monday following the news, with the Philippine Stock Exchange saying that the company must first disclose the full impact of the non-renewal of its franchise to its business operations, financial condition, and future plans. Its share price dropped ahead of Friday’s historic vote, while the share value of its rival GMA Network soared by 10 percent yesterday.

Luis Limlingan, managing director of brokerage firm Regina Capital, said it’s still hard to say if banks will stop lending to ABS-CBN with its rejected franchise. He added that the network will have to “show proof” that it can pay its debts to those that will continue to lend, but added that there should be delayed payments.

In separate statements, Insular Life and Allianz PNB Life said they currently have no loan exposure to ABS-CBN, adding that the debt has already been settled in 2014.

This article has been updated with a statement from Insular Life.

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