Senate to legislate bad loan transfers from banks via separate bill

THE Senate will legislate bank bad loan transfers to asset management companies in a separate bill, rather than as an amendment to the Bayanihan 2 bill, the head of the chamber’s finance committee said Sunday.

Senator Juan Edgardo M. Angara said among the amendments proposed by the executive department is the measure that will unburden the banking system of bad loans in the Bayanihan 2 bill.

“Dun sa pinadala na gusto pa nilang dagdagan, ‘yung iba baka gawin na lang separate measure tulad ‘nung tinatawag na FIST bill (Financial Institutions Strategic Transfer) (Among the proposed amendments, we might have to file a separate measure for FIST),” he said over DZBB radio Sunday.

“I think banks committee Senator Grace (It’s still being heard by Senator Grace’s banks committee),” according to Mr. Angara, who is also vice chairman of the banks, financial institutions and currencies committee. He was referring to Sen. Grace Poe-Llamanzares, who chairs that committee.

The proposed amendments also included minor changes to the Bayanihan 2 bill, which Mr. Angara said it will be tackled in the bicameral conference committee, as the measure has been approved on second reading.

Bayanihan 2, also known as Senate Bill No. 1564, hurdled second reading on June 3, but was not able to obtain final-reading approval immediately in the absence of notice from Malacañang certifying it as an urgent measure. Non-urgent measures need a gap of three days between second and third readings, while urgent measures may be passed on third reading on the same day as the second.

Mr. Angara said the FIST legislation is similar to the Special

Purpose Vehicle Law, enacted in 2002 in the wake of the Asian financial crisis.

“Maraming gipit na negosyo, dapat mabigyan ng puwang sa pagbabayad ng utang, at para naman ma-incentivize o maencourage ‘yung ating mga bangko na gawin ‘yan (There are many businesses in financial distress that need debt relief, and we need to give banks incentives to do so),” he said.

“Tanggalin o luwangan natin ‘yung mga regulasyon sa mga bad loans o non-performing loans. (That will involve the removal or easing of many rules on bad loans or non-performing assets),” he added.

The House of Representatives approved its version of the measure, House Bill No. 6816, on final reading on June 2.

The House version provides that transfers of non-performing assets from financial institutions to asset-management companies are exempt from documentary stamp tax, capital gains tax, value-added tax and creditable withholding income tax.

Rizal Commercial Banking Corporation Chief Economist Michael L. Ricafort said if passed, the measure will provide “greater flexibility” for banks to unload bad loans and focus on lending further to keep the economy afloat.

“The FIST Bill when signed into law provides greater flexibility/ leeway for banks to unload NPLs and ROPAs (real and other properties acquired), so banks can better concentrate on increasing/expanding their lending activities as well as better service their deposit and loan clients,” he said in an e-mail.

“The FIST Bill would help support the overall economic recovery program by ensuring the continued financial strength/resilience of the banking system after the COVID-19 lockdowns.” —