BSP loans, advances soar 76% in H1
Published Sep 23, 2019 12:00 am
By Lee C. Chipongian
The Bangko Sentral ng Pilipinas has released (BSP) P301.47 billion in total loans and advances in the first six months or 76.45 percent year-on-year, the highest level in the last five years.
MB file photo.
This was the highest loans and advances released by the BSP to banking institutions – some of which may be in “precarious” conditions – in the last five years. Before 2016, grants were only in the P85-level.
Loans and advances to the Philippine Deposit Insurance Corp. (PDIC) accounted for a large chunk of BSP releases, while the rest are channeled through its facilities: Rediscounting, emergency loans and overnight clearing line.
Credit released from its peso rediscounting facility alone has reached P107.65 billion as of end-June, and P116.57 billion by end-August which was the latest data on rediscounting loans. The end-June rediscounting loan was a huge jump from only P9.77 billion same time in 2018.
Rediscounting is one of the BSP’s standing credit facility and enable banks to liquidate and refinance loans using securities as collaterals. Basically, banks turn to rediscounting loans for their temporary liquidity requirements.
PDIC is mandated to handle the assets and liabilities of all banks that are shut down by the BSP. It borrows from the BSP to extend financial assistance to banks’ rehabilitation and also to cover deposit insurance.
Bulk of loans extended by BSP to PDIC include loans granted since 1993 and include interests and other balances.
Some of these loans include the P4.59 billion granted to Allied Banking Corp. as the beneficiary bank for the assisted bank, Orient Bank in 1999; the P10 billion loans to BDO Unibank Inc. for First e-Bank in 2002; the P7.2 billion BDO loan to assist United Overseas Bank of the Philippines in 1999; the P1.78 billion loan to Bank of Commerce for Traders Royal Bank in 2002; and the P10.1 billion loan to Export & Industry Bank granted in 2006.
Other BSP-backed PDIC loans were the P1.17 billion to Keppel Monet Bank in 1997; the P7.64 billion to Philippine Bank of Communications in 2004; P1.27 billion loan for Planters Development Bank; P23.9 billion for Philippine National Bank in 2001; P20.5 billion for United Coconut Planters Bank in 2003; and the P3-billion financial assistance to G7 Bank Inc. in 2008.
With the amended BSP Charter, giving officials more power and authority as the regulator of banks, they could go after delinquent banks with unpaid loans.
BSP Senior Assistant Governor and General Counsel, Atty. Elmore O. Capule, said earlier that enhancements to its credit operations – because of the amended BSP Charter approved last February – also empower the BSP to improve its collection of past loans and advances.
Capule said that since the BSP is the bank of all banks, they are the largest creditor in the country and the last resort for all banks with cash and capital difficulties. “If they default or they cannot pay, then we have to collect. We have a lot of problems collecting from banks,” admitted Capule.
With the new provisions under Republic Act 11211 (“An Act Amending Republic Act No. 7653, Otherwise Known as the ‘New Central Bank Act’, and for Other Purposes”), the collaterals on loans and advances released by the BSP will no longer be restricted by any other court process or administrative restrictions on land use since it will not be included in the property of insolvent persons or institutions.
The new BSP Charter’s enhancements to credit operations are: Exemption of collaterals from attachments, executions and other restrictions; deputization of legal staff in foreclosure cases; take possession of foreclosed property without posting a bond; and unsecured claims will be considered preferred credits.
The BSP extends discounts, loans and advances to banking institutions in order to influence the volume of credit consistent with objective of price stability, according to the BSP.
"When availing of the loan facilities of the BSP, private banks assign to BSP their receivables including the collaterals. Upon failure of these banks or their borrowers to pay their loans, the BSP forecloses these real properties," said the BSP.
MB file photo.
This was the highest loans and advances released by the BSP to banking institutions – some of which may be in “precarious” conditions – in the last five years. Before 2016, grants were only in the P85-level.
Loans and advances to the Philippine Deposit Insurance Corp. (PDIC) accounted for a large chunk of BSP releases, while the rest are channeled through its facilities: Rediscounting, emergency loans and overnight clearing line.
Credit released from its peso rediscounting facility alone has reached P107.65 billion as of end-June, and P116.57 billion by end-August which was the latest data on rediscounting loans. The end-June rediscounting loan was a huge jump from only P9.77 billion same time in 2018.
Rediscounting is one of the BSP’s standing credit facility and enable banks to liquidate and refinance loans using securities as collaterals. Basically, banks turn to rediscounting loans for their temporary liquidity requirements.
PDIC is mandated to handle the assets and liabilities of all banks that are shut down by the BSP. It borrows from the BSP to extend financial assistance to banks’ rehabilitation and also to cover deposit insurance.
Bulk of loans extended by BSP to PDIC include loans granted since 1993 and include interests and other balances.
Some of these loans include the P4.59 billion granted to Allied Banking Corp. as the beneficiary bank for the assisted bank, Orient Bank in 1999; the P10 billion loans to BDO Unibank Inc. for First e-Bank in 2002; the P7.2 billion BDO loan to assist United Overseas Bank of the Philippines in 1999; the P1.78 billion loan to Bank of Commerce for Traders Royal Bank in 2002; and the P10.1 billion loan to Export & Industry Bank granted in 2006.
Other BSP-backed PDIC loans were the P1.17 billion to Keppel Monet Bank in 1997; the P7.64 billion to Philippine Bank of Communications in 2004; P1.27 billion loan for Planters Development Bank; P23.9 billion for Philippine National Bank in 2001; P20.5 billion for United Coconut Planters Bank in 2003; and the P3-billion financial assistance to G7 Bank Inc. in 2008.
With the amended BSP Charter, giving officials more power and authority as the regulator of banks, they could go after delinquent banks with unpaid loans.
BSP Senior Assistant Governor and General Counsel, Atty. Elmore O. Capule, said earlier that enhancements to its credit operations – because of the amended BSP Charter approved last February – also empower the BSP to improve its collection of past loans and advances.
Capule said that since the BSP is the bank of all banks, they are the largest creditor in the country and the last resort for all banks with cash and capital difficulties. “If they default or they cannot pay, then we have to collect. We have a lot of problems collecting from banks,” admitted Capule.
With the new provisions under Republic Act 11211 (“An Act Amending Republic Act No. 7653, Otherwise Known as the ‘New Central Bank Act’, and for Other Purposes”), the collaterals on loans and advances released by the BSP will no longer be restricted by any other court process or administrative restrictions on land use since it will not be included in the property of insolvent persons or institutions.
The new BSP Charter’s enhancements to credit operations are: Exemption of collaterals from attachments, executions and other restrictions; deputization of legal staff in foreclosure cases; take possession of foreclosed property without posting a bond; and unsecured claims will be considered preferred credits.
The BSP extends discounts, loans and advances to banking institutions in order to influence the volume of credit consistent with objective of price stability, according to the BSP.
"When availing of the loan facilities of the BSP, private banks assign to BSP their receivables including the collaterals. Upon failure of these banks or their borrowers to pay their loans, the BSP forecloses these real properties," said the BSP.