Thrift, rural banks seek relief

MANILA, Philippines - Regulatory relief will be asked by thrift and rural banks from the Bangko Sentral ng Pilipinas (BSP), officials said, after two days of torrential rains and flood forced some of their branches in Metro Manila and parts of Luzon to stop operations for at least a day.

 “We will simply ask for regulatory relief for what the calamity has caused. We are collating the extent yet,” Rural Bankers Association of the Philippines (RBAP) executive director Vicente Mendoza told The STAR in a text message.

Meanwhile, Patrick Cheng, president of the Chamber of Thrift Banks, said in an e-mail: “The CTB is collating feedback from our members, particularly those in the affected areas, so that we have the necessary information in order to file for regulatory relief from the BSP.”

Officers of the Bankers Association of the Philippines, the umbrella group of the larger universal and commercial banks, could not be reached for comment.

Mendoza said relief to be requested will be similar from what BSP granted during the aftermath of tropical storms “Ondoy” and “Juaning” in September 2009 and August 2011, respectively.

Among others, BSP then waived the penalties for delays in submission of supervisory reports, reduction of general loan loss provision to one percent from five percent and moratorium on monthly payments to BSP for banks with ongoing rehabilitation programs.

RBAP president Edward Leandro Garcia said in a phone interview RBAP will file its relief application by next week “as soon as all reports we are receiving are finalized.”

He said rural banks need the relief, pointing to penalties and loan loss provisions which may have bad effects to rural banks, most which have already been put under receivership.

 “For example, those farmers who have been battered by strong rains. You need to give them more time to pay their loans until things have normalized. In effect, you also have to extend the same relief to banks which will bear the delays on payment,” Garcia explained.

 “There should be an assumption that some borrowers were not able to pay their dues on time,” he added. Bad loans are covered by banks’ loss provisions, which in turn are charged against their capital. 

For his part, Cheng said thrift banks will be seeking an “extension of BSP regulatory reporting deadlines, among other items.”

Thrift and rural banks are small firms in general. Their combined assets, which amounted to P794.25 billion as of the first quarter, pales in comparison with that of universal and commercial banks’ P6.667 trillion. This shows thrift and rural banks have lesser resources to cover potential losses as a result of halted operations.