LBP opens housing facility for thrift banks

The Land Bank of the Philippines (Landbank) will open a so-called Multi-Window Lending System (MWLS), a housing finance facility for thrift banks.

Real Bank president and concurrent president of Chamber of Thrift Bank (CTB) Reynato Sarmiento said this facility will be available before the end of the year.

Aside from this, Sarmiento said the CTB and Landbank officials are looking at the possibility of providing thrift banks with special liquidity facility (SLF).

SLF, he said, would serve as an alternative to the liquidity facility from the Bangko Sentral ng Pilipinas (BSP) or Philippine Deposit Insurance Corp. (PDIC) which are believed to be "very risky and difficult to avail".

However, he said they have requested the simplification of requirements and the fast-tracking of approval and release of availment of the special liquidity facility for thrift banks.

Sarmiento said the Landbank has asked the thrift banks to prepare the collaterals to be offered under the lending window.

According to Sarmiento, these two lending windows are part of the contingency plans that would address the possibility that political and economic problems will worsen.

He said the CTB board had decided to support the adoption of measures to siphon off excess liquidity in the banking system in order to curb speculative attack against the peso. "These measures included the imposition of higher liquidity reserves and the issuance of high-yielding cash management bills," he said.

Sarmiento said the CTB supported the hike in the yields on peso placements to dampen demand for foreign exchange denominated placements.

"However, we advised against very high interest rates as this would do more harm than good to our economy," he said.

The CTB, he said, also strongly objected the imposition of additional liquidity reserves for thrift banks simply because thrift banks do not and cannot speculate in the forex market.

Though this position, he said, was upheld by the central bank through the issuance of the BSP Circular 267, they should inform the monetary authorities about the thrift banks' view about this matter.

"We had to make very strong representation that banks who complied with the mandate to increase liquidity cover be allowed to sell back Treasury bills they bought at the original purchase price since this is an unwinding transaction rather than a trading transaction," he said.