AIG Philam Savings Bank has no exposure to US mortgage market

AIG Philam Savings Bank Inc., a thrift and savings bank affiliated with Philippine American Life Insurance Co. (Philamlife), has reiterated that it does not have any exposure to the collapsed US investment bank Lehman Brothers.

The bank said it does not invest in subprime mortgage investments and has no direct exposure to the US mortgage market. Its loans and investments are mainly in consumer auto loans/credit card receivables, and in highly liquid government securities and overnight lending to the Bangko Sentral ng Pilipinas (BSP).

“The bank remains steadfast in its commitment to service its customers and meet its obligations as they come due. We operate strictly within the regulatory requirements of the BSP,” Joven D. Reyes, president and chief executive officer of AIG Philam Savings Bank, said in a statement.

AIG Philam Savings is more than adequately capitalized with its capital adequacy ratio (CAR), a risk-weighted manner of ensuring a bank’s ability to cover losses), at 12.65 percent as of end-August this year.

This is higher than the central bank’s required 10 percent, and the eight percent ratio recommended by the Bank for International Settlement (BIS), often referred to as the central bank of all central banks.

Meanwhile, Philam Asset Management Inc. (PAMI) said all funds it manages are separate legal and independent entities from AIG. PAMI is a fund manager directly affiliated with the Philamlife Group of Companies.

“Each fund is an investment company registered with the Securities and Exchange Commission (SEC), with separate and distinct board of directors,” Karen Roa, chief executive of PAMI, said in a separate statement.

Roa added that all the funds are public corporations with a broad base of shareholders, stable and highly liquid.

All its funds are invested in the Philippines, except with the AIG Global Bond Fund Philippines.

The PAMI chief executive explained that the global bond fund is invested in low-risk, investment-grade global fixed income securities.

Earlier, Philamlife officials pointed out that while it is a subsidiary of AIG, it has different books and are governed by regulatory agencies of the Philippines.

“We have different revenue streams. The laws of the United States govern the American international Group (AIG) and Philamlife follows Philippine corporate regulations,” AIG country head and Philamlife president and chief executive officer Jose L. Cuisia Jr. said.

The Philamlife Group consists of financial institutions that are among the leaders in their respective sectors.

AIG, the world’s biggest insurer with $1.05 trillion in assets, has received a US government-initiated $85 billion bailout loan, payable in two years. Lehman Brothers, on the other hand, has been allowed to go on receivership in preparation for liquidation and closure.