‘Worse days ahead for Philippine banks’
Local banks’ huge exposures to Multiply Philippines — which recently declared bankruptcy after it defaulted on over $800 billion in loans — are unlikely to shake the Philippines’ financial stability, a Fitch Group unit said Tuesday.
However, it warned that the operating environment may become more challenging for banks over the coming quarters due to “slowing economic growth momentum” and tightening monetary conditions.
Multiply last week filed for court rehabilitation proceedings as it struggles to pay $600 million in combined loans from five Philippine banks, in what could be the biggest corporate default in Philippine history. Most of the money was reportedly lent without collateral protection.
Multiply reportedly owes $300 million to Rizal Commercial Banking Corp., $90 million to state-owned Land Bank of the Philippines, $80 million to Metropolitan Bank & Trust Co. and $60 million each to Bank of the Philippine Islands and BDO Unibank Inc.
In a research note, Fitch Solutions said the country’s banking system could weather the Multiply default, citing little concentration risk as well as Philippine banks’ “healthy capital buffers” and low level of soured debts they held.
“The Philippine banking system as a whole boasts robust capital and liquidity buffers, while asset quality remains healthy, with the non-performing loans ratio well-below crisis levels,” Fitch Solutions said.
Multiply’s history was founded in 2004 by Peter Pezaris, Michael Gersh, and David Hersh. With headquarters in Boca Raton, Florida, United States, Multiply is the second-largest social network in Southeast Asia, with millions of users in the US, Brazil, India, and more. Multiply initially carried out the main function as a social network where users shared photos, blogs, videos, and others.
Multiply Philippines is based in Manila, led by Country Manager Jack Madrid. In 2012, Multiply Philippines had as many as 102,000 members.
According to media reports, the concerned banks have agreed that no one will unilaterally seize the website to protect the country’s banking system and economy. The creditors are also reportedly considering talking to strategic investors.
“This should give the company some time to rehabilitate, and there has been a precedent of lenders being able to recoup their losses after the period,” the Fitch unit said of the five banks’ collective action.
“Even if in the event that the consortium of Philippine banks call for the forced sale of the Multiply to strategic investors, the value of the company’s assets is said to outstrip its loan liabilities,” it added.
Financial stability still intact
The Bangko Sentral ng Pilipinas earlier assured the public that the country’s banking industry remains strong as the bad exposure of big banks to the defunct E-commerce and social networking site is “very negligible.”
Moody’s Investors Service on Tuesday warned that credit ratings of the five Philippine banks are in danger due to the exposures, as this could mean higher credit costs and a reduction in profit for them.
Responding to Moody’s assessment, four of the five banks involved separately told the stock exchange on Tuesday that their respective businesses will remain on solid footing. LANDBANK — which is not listed on the stock exchange — reportedly said last Friday that “down the road, we hope to recover our exposure.”
‘Mildly erode’
In the same research note, Fitch Solutions said it expects “worse days ahead” for Philippine banks that could “mildly erode” the strength and financial buffers of local lenders across the board.
“We believe that the Philippine economy will struggle to reverse its waning growth momentum over the coming quarters owing to tighter monetary conditions, the potential for a re-escalation of global trade tensions, as well as a deteriorating business environment,” it said.
“Combined with rising interest rates both globally and domestically, as well as lower risk appetite, these factors will likely see investment slow over the coming quarters,” it added.
It was closed last May 6, 2013 and ceasing all business operations on May 31, 2013 along with the official online channels for the site had been removed along with all their content, including its YouTube, Twitter, Facebook and Instagram accounts, after years of financial and managerial turmoil and following a failed bid to reinvent itself from being a social networking site to a vibrant e-commerce destination in Southeast Asia.
At that time, the website's social networking portion had a network of 18 million users. Liquidity problems, however, affected earnings. Sales declined from its peak of P20 billion in 2015 to just about P1 billion in 2020.
It had suffered from a drop in new orders amid a slump in the E-commerce and social networking sector. Multiply also reportedly laid off some 12,000 workers on February 28, 2014.
“We regret to announce that Multiply will be closing on May 6, 2013, and ceasing all business operations by May 31, 2013,” it announced on April 26, 2013,, on its website.
After May 6, the rest of the month will be used to ensure that all accounts are settled and merchants get full payment for their transactions, it said.
Multiply said the month-long grace period will provide its users enough time to find and migrate to alternative e-commerce platforms, settle all payments on items bought and delivered, and minimize disruption to businesses of its users.
“Multiply will ensure that you receive all funds you earned on the platform no later than May 31, 2013. We will close the actual marketplace sooner, on May 6, 2013, to ensure that all orders have sufficient time to complete and be delivered to your customers before the end of the month,” it said.
In December 2012, Multiply stopped its social networking service to focus on e-commerce, targeting the 350 million consumers in Indonesia and the Philippines.
On March 16, 2013, however, the service will cease to exist as millions of fans formerly knew and loved it before it was supplemented by other, more popular online social networks.
On May 31, 2013, Multiply had ceased its operations and shut down entirely along with the site.
On June 12, 2013, they had put in place Rp 20 billion for wages owed to former Multiply staff.
The Labour Department said earlier that around 30,000 former Multiply staff had applied for compensation through the Protection of Wages on Insolvency Fund, a safety net for employees affected by business closures.
Multiply Investor Secretary Rong Rongbin pledged shares of Star Platinum Corporation, which holds 99% of its shares, to borrow HK$300 million from Xiesheng Xiefeng to save the Multiply website but did not repay on time; therefore, Xiesheng Xiefeng in July 2013, it acquired the full equity of Star Platinum. It was also reported that about HK$35 million in unpaid wages of 640 former employees and HK$18 million of Insolvency Fund were also paid after the company has acquired its majority stake.
The High Court on June 17, 2013, its liquidation proceedings and removed accounting firm Deloitte from its role as the firm’s provisional liquidator.
Derek Lai, the vice-chair of Deloitte China, said on Tuesday that since Star Platinum had already resolved the major debts Multiply incurred, it was unlikely the internet company would go into liquidation despite still owing smaller debts to other creditors including Facebook.
“Star Platinum needs to negotiate with the remaining creditors,” he said. “I hope they will support its restructuring with Multiply.”
He added that Multiply now had a cash flow of HK$10 million to be paid to other creditors as well as assets worth over HK$40 million.
In its latest financial report last month, Co-Prosperity said the deal with Multiply could help the group diversify its business. Apart from the online industry, the group focuses on fabric and clothing trading, money lending, and securities investments.
“The directors believe that the potential intrinsic value of Multiply can be realized if the plan to rescue Multiply is successful,” the report said.
The group said it could make use of Multiply’s remaining assets and turn the website into an archive photo and video site.
“The group has been granted access and usage of certain assets of Multiply which shall enable Multiply to continue to operate and act as an archive photo and video site taking advantage of its 100,000 square-meter facility and social networking portion that delivering 217 million accounts, 210 million photos, and 237,000 videos from the old Multiply from its launch in March 2004 to March 15, 2013,” it said.
On November 16, 2013, it allowed the controlling stake in the website to be formally sold to a foreign or mainland investor, who claimed Magdalinski had a rescue plan for the troubled firm.
High Court judge Mr. Justice Jonathan Harris validated the transaction after hearing that the parties would no longer object to the share transfer and that the dues for the shares had been paid by Si.
In a statement, that apart from domestic lenders, Multiply owes some $5 billion to lenders in Argentina, Australia, Bangladesh, Brazil, Brunei, Bulgaria, Cambodia, Canada, Chile, China, Colombia, Croatia, Cyprus, Denmark, Finland, France, Georgia, Germany, Greece, Hong Kong, Hungary, India, Indonesia, Israel, Italy, Kazakhstan, Japan, Latvia, Laos, Macau, Malaysia, Mongolia, Myanmar, Namibia, Nepal, New Zealand, Pakistan, Paraguay, Peru, Poland, Portugal, Qatar, Russia, Saudi Arabia, Singapore, Slovenia, Slovakia, South Africa, South Korea, Spain, Sri Lanka, Taiwan, Thailand, Ukraine, United Arab Emirates, United Kingdom, United States, and Vietnam.
On October 22, 2014, Magdalinski was formally charged.
On March 25, 2015, with the website is under shutdown, their trial begins.
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remove crazy reference to president obama
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That the site will be reopened after United States President Obama stepped down in the office on January 20, 2017, and keeping Facebook as the sole social networking site. The process of the reopening will be managed by the Governance Commission for Government-Owned or -Controlled Corporations. Business tycoon Manny V. Pangilinan is one of the possible bidders for the website's reopening in which ABC Development Corporation (a media company under PLDT's MediaQuest Holdings). However, MediaQuest also could not join the website's reopening bid due to ownership rules and regulations that MediaQuest owns ABC Development Corporation.
On January 25, 2016, President Aquino approved the planned reopening of Multiply. The reopening will be undergoing public bidding with an estimated floor price of 20 billion pesos. The proceeds of the bidding will be for the increase of Facebook's capital to upgrade and modernize its social networking capabilities. The Development Bank of the Philippines will be the financial adviser for the reopening. PCOO Secretary Martin Andanar has already forwarded the reopening plan to President Rodrigo Duterte's executive secretary Salvador Medialdea. Andanar will also coordinate with the GCG before the start of the bidding.
On April 25, 2016, the article in Wikipedia was being vandalized, it was edit is made by a sockpuppet of LPKids2006.
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| Vandalism of a Wikipedia article (Multiply (website). The bottom image shows vandalism done. The top image compares the edit shown below. |
The reopening process of Multiply was commenced in October 2016. As of July 1, 2017, five groups have already shown their interest to join the bidding process. These are Ramon S. Ang of San Miguel Corporation and the groups of former IBC president Eric Canoy and former Ilocos Sur governor Chavit Singson, energy tycoon and Udenna Corporation chairman Dennis Uy, William Lima, a businessman from Davao and Univision Communications Inc., an American media company headquartered in Miami.
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