Bankers Association of the Philippines (BAP) President Cesar E. A. Virata is looking forward to the extension of the Special Purpose Vehicle (SPV) law, particularly the sunset provisions, which would allow banks to let go of its non-performing assets with certain incentives.
In an interview with Business Bulletin, Virata said the proposed two-year additional timetable for banks to dispose of its assets is being anticipated by BAP-member banks.
"That is what we are waiting for," stressed Virata.
According to Virata, the BAP officers have already finished their dialogue with Senator Ralph Recto, who is expected to sponsor the bill extending the SPV sunset provisions before the holiday break.
Senator Manuel Villar, in an interview, narrated that the SPV law extension is one of the two priority bills the Senate may act upon when it resumes session sometime January of the coming year.
The other priority is the anti-terrorism bill.
The lawmakers have put a cap or limit on the availment of the tax incentives and other privileges in the original SPV Law to prevent any possible abuse. These perks expired last April 2005.
Should the legislators fully endorsed the extension, authorities and market players have projected a substantial reduction in the percentage of the industry’s total loans that have turned sour and the level of real properties owned and acquired (ROPOA) as well.
"It will be good for the banking system," Virata, vice-chair of Rizal Commercial Banking Corporation, stressed.
The Bangko Sentral ng Pilipinas (BSP) just this week claimed some P100 billion worth of non-performing assets (NPAs) may be disposed by banks with the proposed additional time that would be provided in the extension.
It was observed that some banks have delayed for sometime to sell-off their NPAs, composed of loans that have turned sour and ROPOA, with the hope that some could still be recovered.
Others, on the other hand, have started conducted ROPOA auctions, which have proven to be an effective way of selling the assets with minimum discount.
Under the proposed SPV law extension, banks will be given tax exemptions and reduced registration and transfer fees to soften up the dent in its balance sheet because of the discount in the sale of their NPAs.
The regulators believed some P97 billion worth of NPAs have been unloaded by banks under the PSV law.
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