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Should I Start Pulling My Money Out Of Bdo?


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Banco de Oro reported a net profit of Php1.06B for the first 9 months of the year (down 78% year-on-year) implying a loss of Php1.3B for 3Q alone as a result of provisions made in 3Q for its exposure to Lehman via credit linked notes.

 

Earlier, BDO disclosed that it had made Php3.8B worth of provisions against their USD130M exposure. The provision partially came from re-allocation of excess reserves, and the balance charged through the P&L.

 

Outside of trading losses and resulting provisions, BDO's underlying businesss seems alright. Loan growth was at 35% (vs the banking industry's 22% growth) funded by a similar 32% increase in deposits. Despite the losses, BDO reported total Capital Adequacy Ratio of 13.7%, comfortably above the 10% minimum.

 

But again....who knows what else is lurking out there.

 

Indeed who knows what evil lurks in the hearts of men. Many banks will be taking quite a hit on the mark to market valuation of their securities.

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Indeed who knows what evil lurks in the hearts of men. Many banks will be taking quite a hit on the mark to market valuation of their securities.

 

Absolutely.

 

Last week, the BSP issued Circular 628, amending Circular 626, which allowed banks to reclassify accounts from AFS into HTM. The key changes brought about by the Circular are:

a) the deadline was moved from 01 Nov to 15 Nov; and

B) banks can now choose any date from 01 July to 14 Nov when pricing the assets they choose to reclassify (in the previous circular, banks had to use 01 July as repricing date); provided that all assets that a bank chooses to reclassify must be priced at the same date.

 

Note that the rules include CLNs.

 

This means that any mark-to-market loss recorded in 3Q08 could be reversed depending on how much each bank chooses to reclassify. Given the movements of bond yields, it would make most sense for banks to price their assets to mid-September 08, just before Lehman went bust.

 

BDO would be a good example, having booked a 3Q08 loss of Php1.3B, primarily on MTM losses including its CLNs.

 

So much for limiting the risk of moral hazard.

 

Knowing the foregoing, should you pull out your money from BDO? :blink:

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Absolutely.

 

Last week, the BSP issued Circular 628, amending Circular 626, which allowed banks to reclassify accounts from AFS into HTM. The key changes brought about by the Circular are:

a) the deadline was moved from 01 Nov to 15 Nov; and

B) banks can now choose any date from 01 July to 14 Nov when pricing the assets they choose to reclassify (in the previous circular, banks had to use 01 July as repricing date); provided that all assets that a bank chooses to reclassify must be priced at the same date.

 

Note that the rules include CLNs.

 

This means that any mark-to-market loss recorded in 3Q08 could be reversed depending on how much each bank chooses to reclassify. Given the movements of bond yields, it would make most sense for banks to price their assets to mid-September 08, just before Lehman went bust.

 

BDO would be a good example, having booked a 3Q08 loss of Php1.3B, primarily on MTM losses including its CLNs.

 

So much for limiting the risk of moral hazard.

 

Knowing the foregoing, should you pull out your money from BDO? :blink:

 

Really? Haven't seen this circular yet. I wonder if this will also apply to UITFs? Fortunately or unfortunately I have no money in BDO. I have no money anywhere.

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ask ko lang..yung account ko before ay sa equitable and now nalipat na sa BDO..gusto ko lang malaman kung okay lang ba kung hindi nakakapagdeposit ng more than 6months na?or mababawasan dahil may fee sila kapag hindi ka na nakakapagdeposit ng matagal..

 

thanks in advance

 

kadalasan, hindi nagkakaltas ng fee ang bangko basta hindi bumababa ang deposito ng kliyente sa tinatawag na "minimum maintaining balance". maigi na ikunsulta mo ito sa iyong branch manager para makasigurado ka. dapat mo rin alamin kung mayroong patakaran ang bangko mo tungkol sa "dormant account".

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madaming bangko dito ay nagbenta ng NPL nung lumabas yung SPV law. ito ang isang vehicle para mabawasan ng mga bangko ang mga bad loans nila. ito ay binenta ng paluge sa mga banko katulad ng lehman.

 

kung d tayo magtitiwala sa mga bangko tulad ng BDO, Metro at BPI e sa ka pa magbabangko?

 

pag tinago mo sa bahay, mananakawan ka lang.

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thanks sa reply sir..its been more than 6months na kasi na hindi ako nakakapaghulog and im not there sa pinas to ask about there policies.kasi inopen ko yang account na yan dito sa ibang bansa.and when ask the people here,they dont know also.anyways sir,salamat pa din.i will just ask my mom to go and check sa bank

 

 

kadalasan, hindi nagkakaltas ng fee ang bangko basta hindi bumababa ang deposito ng kliyente sa tinatawag na "minimum maintaining balance". maigi na ikunsulta mo ito sa iyong branch manager para makasigurado ka. dapat mo rin alamin kung mayroong patakaran ang bangko mo tungkol sa "dormant account".
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karamihan ng mga malalaking bangko ngayon ay may website na rin. baka mayroon kang mahanap na impormasyon doon. baka maari ka pang makipagugnayan sa "customer support" gamit ang e-mail para humingi ka ng linaw tungkol sa iyong bank account.

 

thanks sa reply sir..its been more than 6months na kasi na hindi ako nakakapaghulog and im not there sa pinas to ask about there policies.kasi inopen ko yang account na yan dito sa ibang bansa.and when ask the people here,they dont know also.anyways sir,salamat pa din.i will just ask my mom to go and check sa bank
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i don't think bdo will suffer for the wrong investment they made in the us, they are still strong and financially stable

 

strong and financially stable? look at lehman's, aig, and even citigroup lahat yan sarado na if not bailed out (except lehman)by the u.s government.

 

bdo? hmmm they have used gsis/sss money to take in ebc/pci....no respect at all.

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BDO in spite of its exposure to Lehman, is still insulated somehow, from the global financial crisis happening in the US. sure, their performance this year is down compared to last year because of the Lehman exposure. but my gut feel is that BDO is still safe and stable. imagine the implications to the economy, if BDO will have a bank run...the Sy family is still cash rich to allow that to happen to their baby.

 

btw, i don't have any deposit nor investment interests with BDO...

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I would like to wait until the

Next Quarter to say what is what.

Maybe BDO can participate with the

"too big to fail" program in the Economy

They cannot just allow banks as big as that

to fail. Still tanking out on the Millenium

Challenge fund because Aroyos alipores

suck at being corrupt, does add financial

burdens. The key element now is to be

very liquid. Liquidity issues on Lehman investments

in BDO is a concern. We still have to see how

Henry handles that. He does want to

buy Philam for a little more expansion

in corporate stretch. But we still have to wait and

See What happens and how they perform. Your

money is insured up to 250 k by the way.

 

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i have a friend who's a scion of one of the taipans. he withdrew a lot of his cash from several banks, rented safety deposit boxes,and stuffed his cash in there. that's how scared he is.

 

these "audited" financial statements of the banks are hard to decipher. cant really say how true they are. but what this current crisis has shown is that the bigger they are, the hardder they fall (lehman, goldman, merrill, aig, etc).

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  • 3 weeks later...
i have a friend who's a scion of one of the taipans. he withdrew a lot of his cash from several banks, rented safety deposit boxes,and stuffed his cash in there. that's how scared he is.

 

these "audited" financial statements of the banks are hard to decipher. cant really say how true they are. but what this current crisis has shown is that the bigger they are, the hardder they fall (lehman, goldman, merrill, aig, etc).

It seems foolish to put your money in a safety deposit bank. What is that bank closes? No need to worry since Bangko Sentral ng Pilipinas cannot afford commercial banks to close. Our auditing standards in the Philippines are stricter than in America.

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It seems foolish to put your money in a safety deposit bank. What is that bank closes?

 

It's safety deposit "box" not "banks." You may argue that it's just a typo, but your overall comment just showed you do not fully understand how banks work. Anyways, renting these safety deposit boxes are like renting expensive secure lockers. Whatever you put inside the box is yours, even if the bank closes.

 

 

No need to worry since Bangko Sentral ng Pilipinas cannot afford commercial banks to close. Our auditing standards in the Philippines are stricter than in America.

 

Maybe you're too young to remember Banko Filipino, but dont you remember Urban Bank?

 

If a bank fails or closes, PDIC only covers P250k. Any amount over that is "lost."

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bdo, bpi, metrobank and all the other big banks are generally stable. yung sa amerika at europa lang ang may problema kasi pinasok nila ang negosyo ng derivatives. e yung mga bangko natin 'pawnshop' mentality pa lang, medyo beginners, kaya swerte di tayo halos kasali sa krisis.

 

tulog muna lahat ng mahimbing.

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Guest inquirer
strong and financially stable? look at lehman's, aig, and even citigroup lahat yan sarado na if not bailed out (except lehman)by the u.s government.

 

bdo? hmmm they have used gsis/sss money to take in ebc/pci....no respect at all.

 

if there is one thing that asian banks have learn during asian financial crisis is to build up capital and be conservative, compared to the banks in the west who are over expose to risky investment.

 

because of that we can safely say that bdo or any big banks here are financially stable.

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Guest inquirer
ask ko lang..yung account ko before ay sa equitable and now nalipat na sa BDO..gusto ko lang malaman kung okay lang ba kung hindi nakakapagdeposit ng more than 6months na?or mababawasan dahil may fee sila kapag hindi ka na nakakapagdeposit ng matagal..

 

thanks in advance

 

usual practice in banks if an account does not have any activity (no deposit/withdrawal) for one year, your account will become a dormant account, then that's the time they'll charge you fees. I suggest that you make a deposit/withdrawal at least once a year para hindi ma dormant yung account mo.

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