Small banks in flooded areas get regulatory relief

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) has granted temporary regulatory relief to small banks affected by last week’s monsoon rains and resulting flood which forced some branches in Luzon and Visayas to stop operations.

“The (BSP) is granting regulatory relief measures to banks to enable them to similarly assist and ease the financial burden of bank customers adversely affected by southwest monsoon,” the central bank said in a statement.

Thrift, rural and cooperative banks located in areas under state of calamity as of Aug. 13 can avail of the relief, BSP Deputy Governor Nestor Espenilla Jr. said in a text message.

These areas were detailed in the statement as the following: municipality of Pateros and cities of Caloocan, Las Piñas, Makati, Malabon, Manila, Mandaluyong, Marikina, Muntinlupa, Navotas, Parañaque, Pasay, Pasig, Quezon, San Juan, Taguig, and Valenzuela in the National Capital Region; Ilocos Sur, La Union and Pangasinan in Region I (Ilocos Region); Bataan, Bulacan, Nueva Ecija, Pampanga, Tarlac and Zambales in Region III (Central Luzon); Batangas, Cavite, Laguna and Rizal in Region IV-A (Calabarzon); Occidental and Oriental Mindoro in Region IV-B (Mimaropa) and Iloilo in Region VI (Western Visayas).

Measures granted were similar to those extended during the aftermath of typhoons “Sendong,” “Pedring,” “Mina,” and “Juaning” last year, the statement said.

They included the waiving of penalties for deficiencies in legal reserves and delays in the submission of bank supervisory reports as well as imposing a moratorium on monthly payments due to BSP for banks undergoing rehabilitation.

Reserves segregated to cover for restructured loans were also cut to one percent from five percent, the statement said, provided that these loans came from borrowers in affected areas. Losses from delays in loan payments from affected individual and businesses may also be booked on a staggered basis for five years.

Torrential rains from southwest monsoon enhanced by typhoon “Gener” caused heavy flooding in Metro Manila and some parts of Luzon on Tuesday last week, prompting some bank branches to close shop ahead of official private sector work suspension announced by the government.

Some banks remained closed until Wednesday. Last week, The STAR reported that rural and thrift banks would ask BSP to ease regulatory rules as they recover from potential losses brought by the two-day closure. Larger universal and commercial banks, for their part, had not expressed interest to apply for relief.

In the statement though, the central bank said it will give banks, regardless of their size, a 60-day grace period to settle their outstanding rediscounting obligations to BSP or restructure the same, “on a case-to-case basis.” The rediscounting facility allows local lenders to loan from BSP their short-term credit requirements.

All banks are also given the liberty to provide “financial assistance” to their affected officers and employees, including those which are not part of BSP-approved fringe benefits.

Sought for comment, Rural Bankers Association of the Philippines (RBAP) president Edward Leandro Garcia said in a statement RBAP will also ask for a separate relief for banks in Northern Luzon that were affected by tropical storm “Helen” this week.