Senate panel to tackle bills to aid banks, financial institutions amid pandemic

MANILA,  Philippines — A Senate panel is set to start discussions on measures seeking to aid banks and financial institutions reeling from the economic impact brought about by the coronavirus disease (COVID-19) pandemic.

The Senate banks, financial institution s and currencies committee, chaired by Senator Grace Poe, will conduct a “hybrid” hearing on Wednesday together with the ways and means committee to tackle bills intended to help banks manage bad loans, deal with the surge in non-performing assets (NPAs) and rehabilitate struggling businesses.

“Banks and financial institutions need government assistance due to the near-economic paralysis caused by the pandemic,” Poe said in a statement on Tuesday.

According to Poe, it is vital that financial institutions stay afloat and maintain their financial viability to perform critical roles in coping with the crisis, such as distributing cash aid to families in need and providing loans to struggling businesses.

The upcoming hearing will discuss Senate Bill No. 1596 filed by Senator Lito Lapid and Senate Bill No. 1594 by Senator Imee Marcos both titled Financial Institutions Strategic Transfer (FIST) Act.

Poe said both measures seek to encourage banks and financial institutions to sell their NPAs to the FIST, which will be to be created under the bills.

Under the measures, the FIST will serve as a body that will specialize in resolution of distressed assets, seeks to bring in new capital and expertise in dealing with NPAs, rehabilitate failed businesses and increase available lending through the financial sector.

Senate Bill No. 1652 or The Special Purpose Vehicle Act of 2020 filed by Senate President Pro Tempore Ralph Recto will also be tackled in the hearing.

This measure proposes the establishment of asset management companies such as the special purpose vehicle (SPV) for the purpose of acquiring or investing in NPAs of the banks and other financial institutions, Poe noted.

The SPVs, according to Poe, will be afforded an opportunity to reap profits from the subsequent disposition of valuable NPAs which are usually acquired at a discounted price.

Further, the bill seeks to grant certain tax exemptions and fee privileges on the sale or transfer of NPAs to encourage the private sector to establish SPVs.

Poe cited data presented in the bill which showed that as of April 2020, the non-performing loan ratio stood at 2.3 percent of the bank’s total loan portfolio.

“These bills will act as a lifeline to the banks and financial institutions that are our partners in jumpstarting the economy,” the senator said.

EDV