The chairman of the House Committee on Ways and Means on Friday, February 26 assailed the country’s banks for making a big killing by buying P400 billion more stocks and bonds with cheap money but failed to help struggling businesses by lending them enough for their needs.
Albay Rep. Joey Sarte Salceda ranted during the Committee on Banks and Financial Intermediaries deliberations on House Bill No. 7863 or the Fair and Inclusive Credit Report Act as he expressed his dismay over the seeming apathy shown by some banks to businesses that suffered setbacks due to the coronavirus disease (COVID-19) pandemic.
He called on banks to lend more to struggling businesses as he cited Bangko Sentral ng Pilipinas statistics indicating lending growth by banks to have hit its lowest in 14 years, despite massive interest rate cuts by the BSP.
“We made money cheaper not so you can buy more stocks and bonds, but so that you can lend more to struggling businesses. As it is, you will only make your shareholders richer, but your hesitation to lend will do nothing to solve this crisis, or help small businesses,” he said.
“Let me remind you that taxpayers are subsidizing your asset management, and depositors are subsidizing you through this crisis with lower interest rates.” Salceda said.
He added: “The BSP released P1.9 trillion in liquidity from March to December 2020. What were banks doing with it?”
“That is P400 billion more in financial assets held by banks. During this crisis, you would have been better off as a common stockholder of our banks than as a depositor or a borrower,” Salceda noted.
“Less than one percent of Filipinos own shares of stock. Due to trading gains, many banks retained their handsome dividends. Some dividends were one-time giveaways of up to 8% in cash to shareholders. This is exactly what a K-shape recovery looks like,” he stressed.
Salceda said: “My former clients will remain very rich, perhaps even richer once the capital markets bounce back fully. Because of lack of credit, however, thousands of enterprises, along with hundreds of thousands of jobs, are gone for good.”
He also reminded banks that the government intervenes on their behalf so they can lend more, not so that they can be wealth management companies.
“You are not hedge funds. Your role in Philippine society is to lend,” the former Albay governor stated.
“The reason why we prioritize saving you above most other sectors is that you play that critical role in economic recovery. If you will not play that role enough, why should we ask the taxpayer and the depositor to make sacrifices on your behalf?” he said.
Salceda also said that the BSP’s efforts to prop up the economy will remain unsuccessful until more banks lend to more customers.