UPDATE 1-Philippines' BDO says exposure to Lehman at $134 mln

Fri Sep 19, 2008 4:40am EDT

(Recasts, adds bank statement)

MANILA, Sept 19 (Reuters) - Banco de Oro Unibank (BDO.PS), the Philippines' most valuable listed lender, said on Friday it had a total exposure of $134 million to bankrupt U.S. investment bank Lehman Brothers LEH.N, the biggest for any local bank.

"This represents the face value of securities held by the bank," Banco De Oro said in a statement to the stock exchange. "Prior to Sept. 15, 2008, this exposure had been reduced through mark-to-market adjustments and hedging transactions.

Banco de Oro said earlier this week it had set aside 3.8 billion pesos ($82 million) to cover possible losses in its investments with Lehman.

Six other Philippine banks had a combined exposure to Lehman worth $252 million, bringing the total to $386 million, the Philippine Daily Inquirer said, citing documents from the central bank.

There was no immediate comment from the central bank on the newspaper report.

Even assuming the banks won't be able to recover any of their exposure to Lehman, the amount is not expected to exceed 1 percent of their total assets, the Inquirer reported.

Central bank Governor Amando Tetangco said on Wednesday the exposure of Philippine banks to Lehman, mostly through structured products, was confined to 0.3 to 0.4 percent of the banking system's total assets.

The other banks include state-run Development Bank of the Philippines with $90 million, the country's top bank in asset terms Metropolitan Bank & Trust Co (MBT.PS) with $71 million, Rizal Commercial Banking Corp (RCB) (RCB.PS) with $40 million, the Manila branch of Standard Chartered Bank with $26 million, and Bank of Commerce with $15 million.

Bank of Commerce's major shareholders include Southeast Asia's biggest food and drinks firm San Miguel Corp SMCB.PS.

Only Metropolitan Bank, Banco de Oro and Rizal Bank have disclosed that they set aside a combined amount of around $121 million to cover their exposure to Lehman.

As a percentage of total assets, the exposure accounted for as low as 0.5 percent to up to 1.7 percent for each bank, the newspaper report said.

The Philippine central bank said on Tuesday it was ready to provide cash to local banks that may need funds in the aftermath of the collapse of Lehman as authorities all over the world injected cash into money markets to stave off the growing global financial crisis.

($1=46.55 pesos) (Reporting by Manolo Serapio Jr. and Rosemarie Francisco; Editing by Jacqueline Wong)