BSP eases rules for typhoon-hit banks

MANILA, Philippines - Banks affected by a typhoon in August have been granted regulatory relief in order for them to ease the financial burden of their clients, the Bangko Sentral ng Pilipinas (BSP) announced on Tuesday.

"The Bangko Sentral ng Pilipinas is granting regulatory relief measures to banks to enable them to similarly assist and ease the financial burden of bank customers adversely affected by typhoon 'Gener' which devastated several parts of the country last 28 July to 2 August 2012," a statement said.

The relief will cover universal, commercial, thrift, rural and cooperative banks, BSP said, within areas in 14 regions placed under state of calamity by the National Disaster Risk Reduction and Management Council.

These are the cities of Makati, Malabon, Manila, Marikina, Muntinlupa, Navotas, Parañaque, Quezon, Taguig and Valenzuela in the National Capital Region; provinces of Ilocos Norte, Ilocos Sur, La Union and Pangasinan (Region I); Cagayan (Region II); Abra, Apayao, Benguet, Ifugao, Kalinga and Mountain Province (Cordillera Administrative Region), Bataan, Bulacan, Nueva Ecija, Pampanga, Tarlac and Zambales (Region III); Batangas, Cavite, Laguna and Rizal (Region IV-A); and Occidental Mindoro and Oriental Mindoro (Region V).

Also included were the provinces of Aklan, Antique, Iloilo and Negros Occidental (Region VI); Cebu (Region VII); Zamboanga del Norte (Region IX); Lanao del Norte and Misamis Oriental (Region X); Davao del Sur (Region XI); and North Cotabato (Region XII).

Under the "temporary" relief, thrift, rural and cooperative banks will be allowed to exclude from their non-performing loan (NPL) ratios "restructured" loans of borrowers who were affected by the calamity.

NPL pertains to bank credit which remained unpaid 30 days after their due date. This included "restructured loans" or those whose terms were renegotiated by the borrower. Through the relief, banks could maintain good balance sheets even if, for instance, some loans were unpaid when the typhoon struck.

Losses as a result of past-due loans could also be booked on a "staggered basis over a maximum of five years," the statement said.

Aside from that, banks can also reduce their general loan loss provision to just one percent from the original five percent, at least for those loans of affected borrowers. The provision is the minimum amount of reserves required to be set aside for banks to cover for potential losses.

BSP will also refrain from imposing penalties on reserve deficiencies and delays in submission of monthly supervisory reports. There will also be a moratorium on monthly payments to BSP for small banks undergoing rehabilitation, the statement added.

Lenders, including bigger universal and commercial banks, could likewise extend financial assistance to their employees affected by the calamity, including those which are outside their existing fringe benefits.

Affected banks which have existing rediscounting loans will also be granted a "60-day grace period" to settle their debts. The rediscounting facility allows banks to borrow from BSP to finance short-term liquidity requirements.

"These measures will be in effect for a defined period and covered by the additional specific and other prudential conditions," BSP said.

BSP has also previously extended relief to calamity-stricken banks. This year, it provided regulatory relief to lenders affected by the southwest monsoon and tropical storm "Helen", which hit also last August.