Senate to speed up passage of FIST bill

MANILA, Philippines — The Senate will speed up the passage of the proposed Financial Institutions Strategic Transfer (FIST) Act, which aims to ensure stability in the banking system, extend a lifeline to distressed businesses and save millions of jobs, Sen. Grace Poe said yesterday.

Poe, who chairs the Senate committee on banks and financial institutions, issued the statement after President Duterte certified as urgent the bill that allows banks and financial institutions to unload non-performing assets and bad loans to FIST companies.

“Banks play a critical role as they could throw a lifeline to businesses and their workers amid the pandemic,” Poe said. “Providing the local banking system with the support it needs will insulate it from a buildup of bad loans, which could impose costs on the poor.”

She added that the country must be better prepared for the economic impact of the coronavirus pandemic “that has no end yet in sight.”

The senator earlier said the proposed FIST Act could extend a lifeline to distressed businesses, help serve around 600,000 micro, small and medium enterprises (MSMEs), and save over 3.5 million jobs as the country continues to battle the pandemic.

She noted the National Economic and Development Authority estimate that the bill could possibly free up P1.19 trillion worth of loans from the sale of non-performing assets to management companies called FIST corporations.

Poe said the figures were arrived at using data from the Bangko Sentral ng Pilipinas (BSP) as well as assumptions from the banking sector represented by the Bankers Association of the Philippines during the hearings.

“When we get to the bottom of it, this law’s primary objective is really to keep the banking sector above water during this crisis. Before the banks can help MSMEs, we must help the banks first,” she pointed out.

While BSP Governor Benjamin Diokno has assured the committee that the country’s banking system has built-in buffers, Poe said there is a limit to its risk-bearing capacity.

“Our banks have a limit of how much they can carry. The swift enactment of this law will promote investor and depositor confidence, and mitigate the effects of the crisis,” Poe said.

“Let’s stop playing catch-up with the pandemic and prepare the policy for the worse. We know what’s coming,” she said, noting that the bill is an improved version of the Special Purpose Vehicle (SPV) Act of 2002, which was enacted as a response to the Asian financial crisis.

“We say ‘improved’ because we are deliberating it half a decade earlier this time around before we even see the full brunt of the crisis,” Poe added.

The covered institutions from the SPV law will be expanded under the bill to include lending companies and other institutions licensed by the BSP to grant credit.

She said lending companies are the ones lending to MSMEs so they also need to be aided under the measure.

The bill also offers longer applicability period for up to 36 months for assets that have become non-performing as of Dec. 31, 2021 which will give sufficient time to financial institutions to assess the need to offload assets.

As a safeguard against abuse of the system, the bill states that one-person corporations are prohibited to set up their own FIST corporations. Further, to ensure that limited government resources will not be used for risky endeavors, government financial institutions will not be allowed to set up their own FIST corporations.

To address possible violations of the anti-dummy law, foreign participation in foreclosure sales of lands is also removed.

The Securities and Exchange Commission and the Department of Justice are given the power and responsibility to investigate violations.

Once enacted into law, the measure can be immediately implemented even without the promulgation of implementing rules and regulations.

Meanwhile, the House of Representatives under the leadership of Speaker Lord Allan Velasco yesterday expressed support for the proposed amendments that Malacañang wants in the Anti-Money Laundering Law.

“The House is committed to approve the amendments to the Anti-Money Laundering Act of 2001 under House Bill 6174 to address concerns on our anti-money laundering law,” the Marinduque congressman said.

The Speaker promised that the chamber “will see to it that the measure which aims to curb the cost of doing financial transactions of our overseas Filipino workers and the business sector, will be approved expeditiously once plenary sessions resume next month.”

The proposed FIST Act, on the other hand, has been approved on third and final reading by the larger chamber last June, according to Velasco. – Delon Porcalla