Paeng, banks reach ‘gentleman’s pact’ on cap on lending rates

The Bankers Association of the Philippines (BAP) and the Bangko Sentral ng Pilipinas (BSP) agreed yesterday to enter into a "gentleman’s agreement" which would put a five-percentage point cap on corporate lending rate based on the yield of the 42-day cash management bills (CMBs).

This was announced yesterday by BAP president Placido Mapa and BSP Governor Rafael B. Buenaventura following a late afternoon meeting at the Manila Golf Club.

Mapa said the cap would be based on a "realistic" rate for the 42-day CMB.

The Bureau of Treasury (BTr) will sell about P3-billion worth of CMBs today through a tap facility, which is basically a negotiated sale.

The BSP assured that it will take about a week to assess the impact of the two- percentage point increase in the banks’ liquidity reserves.

The BSP, however, reserved the right to increase its rate if there is still a need to mop up excess liquidity.

Buenaventura said the BSP is urging the banks not to take advantage of the current situation to charge high rates to its borrowers.

He pointed out that most the big commercial banks have thrift bank subsidiaries which have been exempted from the liquidity reserve hike.

Stanchart to buy thrift bank

In another development, Standard Chartered Bank has expressed interest in acquiring a thrift bank following the recent approval by the Monetary Board of HSBC’s bid to acquire PCI Savings, BSP sources said yesterday.

Stanchart, however, is denying such plan. But a top BSP source confirmed Stanchart’s interest.

HSBC, Stanchart’s competitor, has been given the go signal to acquire a local thrift bank which would boost HSBC’s retail banking presence in the country. – Marianne Go