Universal bank sells P113M in soured loans under FIST Act


A UNIVERSAL BANK has disposed of P113 million in soured loans to clean its balance sheet under remedies provided by the Financial Institutions Strategic Transfer (FIST) Act, a Bangko Sentral ng Pilipinas (BSP) official said.

“Based on latest data as of end-December 2021, the amount availed by a universal bank with an approved COE (certificate of eligibility) is around P113 million,” Richie L. Suguitan, deputy director of the BSP’s Supervisory Policy and Research Department, said during an organizational meeting of the Senate Committee on Banks, Financial Institutions and Currencies on Tuesday.

“This is trivial when compared to the total loans of that said bank, which stood at around P17-18 billion,” Ms. Suguitan said.

She said as of Aug. 18, 15 banks are in the process of getting COEs to transfer their nonperforming loans (NPLs) and ROPA or real and other properties acquired.

“Of these 15 banks, there were seven banks that were issued final master list applications. And then in addition, there were actually four COEs or certificate of eligibility issued as of Aug. 17,” Ms. Suguitan added.

Republic Act 11523 or the FIST Act was signed in February 2021 and allowed for the creation of Securities and Exchange Commission-registered asset management companies or FIST Corporations (FISTC) to help banks clean their balance sheets after the rise in nonperforming assets (NPA) like loans during the coronavirus pandemic.

Assets that will be recognized as nonperforming until Dec. 31, 2022 will be eligible to be sold under the law to FISTCs.

Under the law, financial institutions need to secure a COE from the central bank as documentary approval so that their determined assets can be sold to FISTCs. This will also allow them to avail of tax incentives and fee privileges for the transaction provided for under the law.

Based on the BSP’s guidelines, financial institutions should first accomplish a master list of eligible NPAs before applying for a COE. Once validated by the BSP, the regulator will give the concerned BSP-supervised financial institution a copy of the final master list of NPAs as reference for its COE application.

Soured loans held by Philippine banks fell for a fourth straight month in June, latest data from the central bank showed.

The gross NPL ratio of the Philippine banking industry dropped to 3.6% in June, from 4.48% a year ago and 3.75% in May.

Loans are considered nonperforming once they remain unpaid for at least 30 days after the due date.

As of end-December 2021, the industry’s gross NPL ratio stood at 3.99%. — K.B. Ta-asan