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Duterte signs FIST bill into law to cushion banks from bad loans

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ABS-CBN News

<div class="embed-wrap"><figure data-feedback="fb:likes,fb:comments"><img src="http://sa.kapamilya.com/absnews/abscbnnews/media/2021/news/02/17/20200320-covid-lockdown-day6-fsj-0902.jpg"/><figcaption>A security guard scans the temperature of clients observing social distancing as they line up to enter the bank in Quezon City, March 20, 2020 on Day 6 of the lockdown in Metro Manila. <em>Fernando G. Sepe Jr., ABS-CBN News/File</em></figcaption></figure></div><p>MANILA — President Rodrigo Duterte has signed into law the Financial Institutions Strategic Transfer (FIST) Act which would cushion banks and credit-granting institutions from the build up of bad loans due to the COVID-19 crisis, the Bangko Sentral ng Pilipinas said on Tuesday. </p><p>&quot;FIST law will allow banks to easily dispose bad assets through Asset Management Companies. The new law will help keep the banking system stable despite the effects of the COVID-19 pandemic,&quot; said BSP Governor Benjamin Diokno. </p><p>The legislation is expected to reduce the non-performing loan ratio &quot;by about 0.63 to 7.0 percentage point,&quot; he said on Twitter. </p><p>Philippine banks&#x27; gross non-performing loan ratio eased to 3.61 percent in December after rising for 11 consecutive months in 2020, central bank data showed, as firms struggled to cope with the pandemic.</p><p>Duterte&#x27;s spokesman Harry Roque confirmed FIST&#x27;s passage.</p><p>&quot;Kinikilala po ng estado ang mahalagang papel ng mga bangko at (the state recognizes the important role of banks and) financial institutions as mobilizers of savings and investments, and in providing the needed financial system liquidity to keep the economy afloat,&quot; he said in a televised announcement.</p><figure class="op-interactive"><iframe allow="autoplay; fullscreen" frameBorder="0" height="100%" id="ivsplayer01" scrolling="no" src="https://player.ivideosmart.com/ivsplayer/v4/dist/html/iframe-src.html?iframeid=ivsplayer01&amp;key=e8c22c015ca9eafa76f1e3edfa03c603&amp;spid=3001339&amp;vid=1622272" width="100%"></iframe></figure><div class="iwantbar">Video courtesy of PTV</div><p>The law provides tax incentives to defray the costs of transferring bad loans to so-called Financial Institutions Strategic Transfer Corporations (FISTCs) that will manage distressed assets.</p><p>Diokno said the Securities and Exchange Commission already has the implementing rules and regulations of the law, with inputs from BSP. </p><p>Duterte earlier certified the measure as urgent as it would set up mechanisms allowing banks and other financial institutions to dispose and transfer non-performing assets and loans.</p><p>&quot;If we keep the non-performing assets in the balance sheets of banks, it will eat up a significant amount of capital as well,&quot; Bangko Sentral Managing Director Lyn Javier said in an earlier hearing in the Senate. </p><p>&quot;This would constrain them from lending to other sectors of the economy.&quot;</p><p>FIST is similar to a law called the <a href="https://lawphil.net/statutes/repacts/ra2002/ra_9182_2002.html">Special Purpose Vehicle Act</a> passed in the wake of the Asian Financial Crisis, which also allowed banks to dispose of non-performing loans and assets, so that they could expand lending. </p><ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/01/18/21/dbp-belies-allegations-it-condoned-loans-from-lopez-group">DBP belies allegations it condoned loans from Lopez group</a></li></ul><p>From one of Asia&#x27;s fastest growing nations before the pandemic, the Philippines suffered last year its worst economic decline since the end of the Second World War as a strict coronavirus lockdown shuttered businesses and put millions out of work. </p><div><strong>— With reports from Jamaine Punzalan, ABS-CBN News; Reuters </strong></div><div><strong>FROM THE ARCHIVES</strong></div><figure class="op-interactive"><iframe height="315" src="https://www.youtube.com/embed/4_MVh5Tijf0?enablejsapi=1" width="560"></iframe></figure><div class="iwantbar">Watch more in <a href="//www.iwantv.com.ph/">iWantv</a> or <a href="//tfc.tv/">TFC.tv</a></div>

<p>President Rodrigo Duterte has signed into law the Financial Institutions Strategic Transfer (FIST) Act which would cushion banks and credit-granting institutions from the build up of bad loans due to the COVID-19 crisis, the Bangko Sentral ng Pilipinas said on Tuesday.</p>

President Rodrigo Duterte has signed into law the Financial Institutions Strategic Transfer (FIST) Act which would cushion banks and credit-granting institutions from the build up of bad loans due to the COVID-19 crisis, the Bangko Sentral ng Pilipinas said on Tuesday.