By Ernie Reyes
After the Senate ratified the bicameral conference committee report, Senator Grace Poe expressed confidence that the Financial Institutions Strategic Transfer (FIST) Act, earlier certified as urgent, would help cushion the financial sector from the pandemic’s impact and allow to bankroll its activities that will fuel the country’s economic recovery.
“Pinoprotektahan ng batas na ito ang kapital para mas maraming mapautang ang bangko. Pero binibigyan rin nito ng pagkakataon ang mga napautang na makuha muli ang kanilang mga ari-arian na marahil ay nailit ng bangko. Lahat ay binigyan ng boses dito,” said Poe.
The FIST aims to speed up the transfer of bad assets of banks to allow them to lend to businesses and consumers while taking away the temptation for government to buy such assets with its limited revenues to better prioritize spending.
The Department of Finance expects nonperforming loans to reach P556.6 billion by the end of the year. At the end of June, data from the Bangko Sentral ng Pilipinas showed consumer loans at P1.997 trillion, with nonperforming loans amounting to P110.9 billion, a third of which consisted of soured housing loans.
“We recognize the urgency of the situation that is why we made it in such a way that it can be implemented immediately. The FIST is straight forward. It does away with having to come up with implementing rules and regulations that stalled the SPV (special purpose vehicle),” said the chairperson of the Senate committee on banks, financial institutions and currencies.
“If our financial institutions are in good shape, they can help businesses and save jobs in return,” Poe said. “This will then promote investor and depositor confidence, and mitigate the effects of the crisis,” she added.
The FIST is limited to the private sector and bars foreign firms from taking part in the bidding and in foreclosing real property.
Under the reconciled version, a loan is considered as nonperforming if no payment has been received on the account for 90 days. After that, borrowers are still given the right to renegotiate or restructure their loans within 30 days.
“Together, this gives the borrower at least 120 days to pay off or renegotiate a loan to prevent the transfer of the asset to a FIST corporation,” Poe explained.
Assets that can qualify for transfer to a FIST corporation will be those that become nonperforming from Dec. 31, 2020 to Dec. 31, 2022.
“What we are seeing now is not yet the full impact of the pandemic,” Poe said. “We know what is coming and as policymakers, we are given the chance to proactively respond to it,” she added. (AI/FC/MTVN)