BSP backs FIST Law

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said he is supporting the proposed Financial Institutions Strategic Transfer (FIST) Law as a safety net or shield for any banks that will be overburdened by non-performing assets (NPAs) because of the pandemic.

Its congressional version, House Bill No. 6622 or the Philippine Banking Industry Resiliency Act Against COVID-19 by Quirino First District Rep. Junie Cua, has been approved.

“The enactment of the FIST Law will complement the regulatory and supervisory initiatives to mitigate the adverse effect of the COVID-19 pandemic,” said Diokno in an online press chat –“GBED Talks” – on Thursday. “It is a necessary measure to assist the domestic financial system in the aftermath of this health crisis” and that it “will promote investor and depositor confidence and will result to the efficient conduct of financial intermediation.”

Diokno is, however, quick to add that banks and the financial system – coming from a position of strength pre-pandemic – is still resilient to cope with the health crisis because of sufficient resources and buffers. But, he wanted a safety net such as the FIST Law on standby.

“The FIST Law would encourage financial institutions to sell their NPAs to asset management companies (AMCs) that specialize in the resolution of distressed assets. To encourage AMCs to form, incentives such as tax exemptions and reduced registration and transfer fees on certain transactions will be provided,” said Diokno.