BSP ready to extend bank relief

MANILA, Philippines - Relief measures for calamity-stricken banks may be similar to those extended during previous disasters when banks themselves applied for the assistance, a central bank official said yesterday.

“Yes, we can consider request for regulatory relief in view of calamity, (but) industry associations (should) request on behalf of affected members,” BSP Deputy Governor Nestor Espenilla Jr. said in a text message.

BSP cannot initiate regulatory easing, he said, thus banks will need to apply first before it can evaluate and see what relief measures will need to be undertaken.

“In the past, we generally follow the established formula for faster decision-making and since those are well-understood. Anything extra will have to be carefully studied,” he explained.

Last Monday, the Rural Bankers Association of the Philippines and Chamber of Thrift Banks have signified intention to file for regulatory relief as early as next week after some of their members’ branches were forced to shut down operations last Tuesday and Wednesday.

BSP had a history of extending assistance to banks affected by natural disasters. Relief measures, meant primarily to lessen losses on the part of lenders, were extended in the aftermath of previous typhoons “Cosme” and “Frank” in 2008, typhoon “Pepeng” and tropical storm “Ondoy” in 2009 and typhoon “Juaning” last year.

During that time, BSP waived penalties for delays in submission of bank supervisory reports and legal reserves deficiencies, imposed a moratorium on monthly payments to BSP by banks with ongoing rehabilitation programs and granted a 60-day grace settling period for lenders with BSP loans.

The central bank also reduced to one percent from five percent the general loan loss provision or the amount they need to set aside to cover for possible losses as a result of restructured loans of borrowers from affected areas.

Espenilla said banks that will be covered by the relief program are those residing in areas under state of calamity as declared by the National Disaster Risk Reduction and Management Council (NDRRMC).

“(E)ligibility is premised on location in official declaration of calamity areas by NDRRMC for objectivity,” he said. As of yesterday, NDRRMC reported that there were a total of five provinces and 23 cities and municipalities under state of calamity, including 10 cities from the National Capital Region.