Dominguez bats for FIST bill this year as tight lending seen hitting businesses

ABS-CBN News

<div class="embed-wrap"><figure data-feedback="fb:likes,fb:comments"><img src="http://sa.kapamilya.com/absnews/abscbnnews/media/2020/business/11/18/20180605-dominguez-south-korea-mnib-2.jpg?ext=.jpg"/><figcaption>Finance Secretary Carlos Dominguez III. Malacanang Photo</figcaption></figure></div>MANILA – Finance Secretary Carlos Dominguez called on lawmakers to pass a bill this year that will let banks offload bad loans as a study released Wednesday showed tight lending has been affecting businesses amid the COVID-19 crisis.The Senate last week passed the proposed Financial Institutions Strategic Transfer (FIST) Act, a measure that lets financial institutions transfer bad loans to asset management companies in order to cushion the impact of the coronavirus pandemic on their finances.A similar measure was passed in June by the Lower House. &quot;We hope the bicameral conference committee in the Congress will finalize the bill within the year,&quot; Dominguez said in a statement during the release of the Financial Stability Report (FSR) by the country&#x27;s financial managers. <ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/09/02/20/bangko-sentral-backs-fist-bill-allowing-banks-to-offload-bad-loans">Bangko Sentral backs FIST bill allowing banks to offload bad loans</a></li></ul>According to the FSR, many companies are struggling to repay their loans due to low earnings amid the pandemic. The report said “debt servicing – and arguably for some, it may be corporate viability – may be the primary issue as a result of the income shock.” To keep operating, many firms need to borrow funds, but banks have become less willing to lend because of worries the loans may not get paid.Firms can either try convincing risk-averse creditors of their future viability, raise more shareholder funding or issue debt securities, the FSR said. While the Bangko Sentral has helped pump more money into the economy to help stabilize it amid the disruptions caused by the pandemic, banks’ credit-risk aversion remains a problem, the FSR said.The report added that the reluctance of banks to lend may further delay economic recovery. “That is, heightened risk aversion among banks has concentrated liquidity with them but these have not been redeployed to reboot economic activity, making the recovery a more difficult proposition,” the FSR said. “This suggests that unless the risk aversion is addressed, any economic forecast of future growth that rests on the premise that risk aversion can self-correct is contentious, particularly if the transition period is protracted.”The FSR also highlighted the Financial Stability Coordination Council’s assessment of the systemic risks the country is facing because of the COVID-19 pandemic.<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>

Finance Secretary Carlos Dominguez called on lawmakers to pass a bill this year that will let banks offload bad loans as a study released Wednesday showed tight lending has been affecting businesses amid the COVID-19 crisis.

Finance Secretary Carlos Dominguez called on lawmakers to pass a bill this year that will let banks offload bad loans as a study released Wednesday showed tight lending has been affecting businesses amid the COVID-19 crisis.

Dominguez bats for FIST bill this year as tight lending seen hitting businesses | ABS-CBN

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Dominguez bats for FIST bill this year as tight lending seen hitting businesses

Dominguez bats for FIST bill this year as tight lending seen hitting businesses

ABS-CBN News

Published Nov 18, 2020 07:34 PM PHT

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Carlos Dominguez

DOF

Bangko Sentral

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Financial Stability Report

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