Senators Imee R. Marcos and Manuel "Lito’’ M. Lapid today pushed for the immediate passage of the proposed Financial Institutions Strategic Transfer (FIST) bill aimed towards helping banks sell their non performing assets while availing of fiscal incentives.
The two lawmakers made the call during today’s public hearing by the Senate banks, financial institutions and currencies committee chaired by Senator Grace Poe.
"Nararamdaman na natin ang epekto ng mga lockdown sanhi ng COVID-19 pandemic. Ayon sa Philippine Statistics Authority,lumiit ng 16.5 percent ang ating ekonomiya kumpara sa parehong panahon noong nakaraang taon. Inaasahang ito ang pinakamalaking pagbagsak ng ating Gross Domestic Product (GDP) mula noong 1985 (We can now feel the effects of the many lockdowns we insitituted as a result of the COVID-19 pandemic. According to the Philippine Statistics Authority (PPSA), the economy crashed by 16.5 percent compared to previous years. We expect this to be the sharpest fall of the GDP since 1985),’’ Poe said in her opening statement.
She added, "This crash precipitated urgent measures from the government. One of which is the recently passed Bayanihan 2 which will pump around P165 billion to stimulate economic activity."
Marcos, chairwoman of the Senate economic affairs committee, said that she was one of the House of Representatives committee members who worked on the antecedent of this bill in late 2002, the SPV (Special Purpose Vehicle) Law.
"We were five years late then. Today, we are in time, while non-performing loans remain at a manageable 2.5 percent. But COVID-19 can be fatal to one's health and the economy. Let us be ready,’’ she added.
"If this initiative in 2002 seemed high-risk and hugely controversial, today we have the confidence and experience to rally around its quick passage. This week, the SEC (Securities and Exchange Commission (SEC) approved new guidelines for corporate debt vehicles. And as early as May, our vigorous BSP (Bangko Sentral ng Pilipinas) governor Benjamin Diokno called for a new SPV law,’’ she added.
"We now also know the pitfalls of an SPV effort - the issues surrounding foreign investors and real estate, the need to extend the 18-month period for filing which I am recommending at 36 months, the bureaucratic delay that surrounded certain applications for a certificate of eligibility. We also have the experience of the Villavicencio suit vs. SPV-AMC, as well as raise today the impact of the Eagleridge Dev Corp vs Cameron Granville 3 Asset Management precedent,’’ she stressed.
Lapid said the government has been continuously and consistently addressing and providing solutions for the pandemic through various measures.
"These measures, however, have their costs in our economy which caused serious economic setbacks. One of the factors that affects not only the performance, efficiency and credibility of banks, but also of the financial sector and the whole economy are the non-performing assets (NPAs), which consists of the non-performing loans (NPLs) and real and other properties acquired (ROPAs),’’ he said.
Lapid cited a study done by the Bankers Association of the Philippines about an expected increase in non-performing loans (NPL) from 5 percent to 20 percent or higher in a matter of months, which would translate to P240-P300 billion of NPLs wherein 50-80 percent thereof may have to be written off.
"As the State recognizes the crucial role of banks and other financial institutions as mobilizers of savings and investments and in the provision of the needed financial system liquidity to keep the economy afloat, this bill seeks to lay down the policies to strengthen the financial sector,’’ he stressed.
"This bill also aims to create the Financial Institutions Strategic Transfer Corporation which will help the financial institutions in the management of their NPAs by encouraging investments and by eliminating the existing barriers in the acquisition of the same, in the rehabilitation of distressed businesses, and in the improvement of the liquidity of the financial system for economic growth and financial stability,’’ he added.