MANILA, Philippines - Philippine Veterans Bank (PVB) is arranging some P5 billion worth of loans to 25 local government units (LGUs) to finance their respective capital projects.
PVB vice president for investment banking Carlos Rheal Cervantes, in an interview said that on top of the P5-billion allocation, they have already lent out P7 billion to LGUs as of end-September 2012.
Most of the projects being funded by the LGU loans are infrastructure-related such as public market, medical center buildings and hotel buildings.
Cervantes said they have found good reason to lend out to LGUs because they have been good payers. Loans payment made by LGUs takenfrom their combined revenues and internal revenue allotment (IRA) from the National Government.
“Since we started lending to LGUs, they have been zero past due rate. This is also because we, backed with stringent regulatory laws, see to it that they comply with the requirements,” he said.
So far, he said about 40 percent of the bank’s total loan portfolio of P30 billion are released to LGUs.
PVB’s Investment Banking Division is also working to strengthen the bank’s partnership with the LGU Guarantee Corp. (LGUGC) to develop the capital markets and the participation of private banks in Municipal financing.
LGUGC’s P1 billion accreditation of PVB under its first and only LGUGC Automatic Guarantee Line, reduces the risk weight rating of debt instruments issued by various LGUs to only 20 percent.
According to Cervantes, they are also now preparing to launch a new credit facility, this time for barangays.
Through this credit line, a qualified barangay could borrow up to a maximum of P5 million to fund their infrastructure projects.
PVB is owned by about 400,000 World War II veterans and their heirs. A substantial portion of its net income is given to the veterans and to projects that benefit their welfare.