BSP, banks nix bill on debt holiday
The Bangko Sentral ng Pilipinas and the local banking industry are strongly opposing the mandated debt holiday of up to two years as the country’s banking sector is not spared from the impact of the global health crisis......»»
Lapid eyes credit assistance program for OFWs
Senator Manuel “Lito” Lapid is rallying for the establishment of a credit assistance program for Overseas Filipino Workers to recognize their contributions to the country’s economy. Lapid filed Senate Bill 2390 or an Act Establishing a Credit Assistance Program for Overseas Filipino Workers, which allows beneficiaries to avail themselves of a loan of up to P50,000 from the Overseas Worker and Welfare Administration. “It is not enough that we acknowledge the contributions of OFWs to the country. A word without corresponding action is nothing. In recognizing their immense role in our economy, we must respond to their needs to repay their sacrifices,” he said. Lapid explained the program targets to defray the living expenses of OFWs’ dependents during the first three months of absences, as well as recruitment expenses, including placement fees, documentation costs, and plane tickets. Under the bill, the loan shall be paid in 12 equal monthly installments or more but not exceeding 24 months at a preferred interest rate not to exceed six percent per annum. “It cannot be overly stressed how important the role OFWs play in the shaping of the country's economy,” Lapid said, noting that cash remittances from OFWs hit a record high in 2021, while the world was reeling from the effects of the COVID-19 pandemic. Records from the Bangko Sentral ng Pilipinas showed that cash remittances coursed through banks rose by 5.1 percent to $31,418 billion in 2021 from $29,903 billion in 2020. “For this reason, the least that we can do to repay them is to craft programs that would allow access to services more easily and without the rigorous processes which are laden with bureaucratic runarounds,” Lapid pointed out. The post Lapid eyes credit assistance program for OFWs appeared first on Daily Tribune......»»
Marcos’ anti-drug focus must improve
Senator Ronald “Bato” dela Rosa hopes President Ferdinand “Bongbong” Marcos Jr. will put more focus on the drug problem during the remainder of his term. “Just a little attention. I hope the drug situation will be taken care of,” Dela Rosa said shortly before Marcos delivered his second State of the Nation Address. “It is different if the Chief Executive himself will pay attention to the drug problem,” he stressed. In his SoNA, Marcos said the battle against illegal drugs will continue after the government launched the “Buhay Ingatan, Droga’y Ayawan” or BIDA program and will put up 102 Balay Silangan Reformation Centers nationwide. “The campaign against illegal drugs continues — but it has taken on a new face. It is now geared towards community-based treatment, rehabilitation, education, and reintegration, to curb drug dependence among our affected citizenry,” the President said. Marcos said the government will be relentless in the fight against drug syndicates by “shutting down their illegal activities and dismantling their network of operations.” “Unscrupulous law enforcers and others involved in the highly nefarious drug trade have been exposed. I will be accepting their resignations,” he said. The President vowed to install individuals of unquestionable integrity who will be effective and trustworthy in the task of eliminating the drug problem, which he described as a “dreaded and corrosive social curse.” “We cannot tolerate corruption or incompetence in government,” he added. Meanwhile, Dela Rosa believes Marcos will continue to support the push to revive the Reserve Officers Training Corps. “He already mentioned the ROTC [program] during his first SoNA. The ROTC bill is still pending, but I will continue pushing for it,” Dela Rosa said. Wowing ‘em all Vice President and Education Secretary Sara Duterte wore a traditional Maguindanaon dress for the annual event. Her SoNA outfit was a Bangala paired with trousers and a flowing inaul or malong. It featured gold accessories that symbolize the wealth and abundance of Mindanao’s natural resources. The inaul is a Maguindanao fabric intricately handwoven using cotton and silk. It is a treasured cultural gem that profoundly reflects the pride, bravery, heritage, and history of the people of Maguindanao. During the first SoNA, Duterte wore a traditional Bagobo Tagabawa dress. She thanked Gov. Bai Mariam Mangudadatu of Maguindanao del Sur and Jearson Demavivas for their creative input that inspired her to wear a Maguindanaon traditional dress. Cotabato City-based designer Israel Ellah Ungkakay designed the dress. Ungkakay has been promoting the culture and tradition of the Moro people of Mindanao through his designs for 16 years after finishing college at the University of Southern Mindanao. He was recently recognized for his contributions to the promotion of Mindanao by the local government of Cotabato City. Travel sector highlighted Tourism Secretary Christina Garcia Frasco rated exceptional the President’s address as he highlighted the crucial role that tourism plays as a reliable pillar of economic growth, providing livelihood to more than 5 million Filipinos. “The President’s ‘whole-of-nation’ approach to development we take as an affirmation of his administration’s thrust towards strengthened tourism governance between and among all stakeholders of the tourism industry,” she said. “As an industry that banks and thrives on the scale of infrastructure development, we are elated to know the President’s continuing commitment to connect all prospective sites of economic development,” she added. Marcos said the stress on tourism will spur the sector’s development countrywide, and consequently, create more livelihood opportunities for Filipinos. The post Marcos’ anti-drug focus must improve appeared first on Daily Tribune......»»
Philippines’ Marcos signs $9 bn wealth fund into law
Philippine President Ferdinand Marcos on Tuesday signed into law a bill creating a $9 billion sovereign wealth fund aimed at boosting economic growth and infrastructure spending, but critics warned it will be prone to misuse. Marcos had pushed Congress for swift approval of the bill, which was filed by his son and cousin late last year. During a signing ceremony at the presidential palace, Marcos said the fund would "leverage a small fraction" of the government's money without adding to the country's debt burden. "We will leverage on a small fraction of the considerable but underutilized investable funds of government and stimulate the economy without the disadvantage of having additional fiscal and debt burden," Marcos said, less a week before he is due to deliver his second State of the Nation address. But a small group of protesters rallied near the palace in opposition to the law, claiming the fund was a "deception" and would put public money "in danger". The 500-billion-peso "Maharlika Investment Fund" will draw most of its funds from the national government, including the central bank, gaming revenue and two state-owned banks. Private banks and companies will also be allowed to invest. The original proposal was for a $4.9 billion fund that would be partly bankrolled by state-run pensions for government and private-sector workers, sparking public fears that retirement savings could be put at risk. The final version of the bill approved by Congress in May said pension funds would not have to contribute. The fund will be allowed to make a wide range of investments, including in corporate bonds, equities, joint ventures, and infrastructure projects. Marcos said Tuesday the fund would help the government achieve its economic growth targets and reduce reliance on foreign borrowings to pay for new roads and bridges. He insisted the fund would be transparent and only top finance professionals would be hired to manage it. "I assure you that the resources entrusted to the fund are taken care of with utmost prudence and integrity," Marcos said. Conventional sovereign wealth funds are seeded by windfall government profits from natural resources such as oil or minerals. The word "maharlika" is widely associated with Marcos Jr's late dictator father and namesake, who presided over widespread human rights abuses and corruption during his two decades in power. He was ousted in 1986. Marcos Sr claimed to have led an anti-Japanese guerrilla unit called Ang Mga Maharlika during World War II, but he has been accused of lying about his war record. mff/amj/dan © Agence France-Presse The post Philippines’ Marcos signs $9 bn wealth fund into law appeared first on Daily Tribune......»»
PBBM thinks certain objections to MIF ‘laughable’
President Ferdinand Marcos Jr. allayed fears of fund mismanagement after signing the Maharlika Investment Fund into law on Tuesday, saying it will be independent of the government and should not be linked to politics. Marcos recalled reading and seeing the criticisms directed at the recently enacted law in the ceremonial signing at Malacanang Palace. He considered some of those objections "laughable." "I noticed that at the very beginning, I would hear some people commenting, 'When we have money like that, when we have those funds, they should be allocated to agriculture, infrastructure, they should be invested in energy development,'" Marcos said. "Well, I was watching television and I said, of course, I was talking to the TV. Where do you think they're thinking of putting it? Are we going to buy fancy cars? Are we going to buy a large yacht? That... it makes me laugh because that is so far from the truth," he added. For context, the bill has undergone revisions to address worries about how the fund would be managed and financed. Hence, Marcos said establishing an Investment Fund would enable the Philippines to reduce its dependence on borrowing for infrastructure development. “I assure you that the resources entrusted to the fund are taken care of with utmost prudence and intent,” Marcos said in a speech after signing into law what he described as an “extremely important” measure. The enactment of the Maharlika Investment Fund into law followed the actions taken by neighboring Asian countries such as Malaysia and Singapore and more recent efforts by Indonesia to establish sovereign wealth funds, although the outcomes have been varied. In Malaysia, the 1Malaysia Development Berhad (1MDB) fund became embroiled in a massive corruption scandal, resulting in significant political consequences. Marcos emphasized that the newly created fund would be entrusted to professionals and operate independently from political interference. To raise its capital, the fund will have the authority to issue a combined total of P500 billion in preferred and common shares, which the national government, state-run companies, and banks can acquire. It was not immediately clear when the fund will be launched. Nevertheless, it has the capability to allocate funds to assets such as foreign currencies, tradable commodities, fixed-income securities, and stocks with the intention of generating revenue to support the funding of infrastructure initiatives. The post PBBM thinks certain objections to MIF ‘laughable’ appeared first on Daily Tribune......»»
Losing cash while holding it
Consulting firm Manulife Investment Management or MIM has presented a financial paradox in that an investor loses money kept in the vault for too long. Investors are increasingly concerned about market risks because of factors such as the increases in US Federal Reserve interest rates, individual banking crises, and increasingly serious geopolitical risks. As a result, many investors are reluctant to invest in the market, and some even sell their stocks and bonds to minimize losses. In response, banks offer higher deposit rates to appeal to investors, who choose to hold money in the form of term deposits. MIM, however, warned in a report that holding cash may seem like a good option during periods of market volatility, but cash remains vulnerable to inflation, especially in the current macroeconomic environment. Inflation erodes the purchasing power of cash, meaning it will buy less with it in the future. A simple calculation to prove the difference between holding cash versus stocks: Between 2011 and 2021, the return on cash (as measured by the annualized return of the three-month US Treasury bill) was 0.47 percent. Adjusted for inflation, which was 2.17 percent on average during those 10 years, the return was minus 1.7 percent. Put simply, $100,000 in Treasury bills in 2011 would have had $84,243.26 of buying power 10 years later. Conversely, over the same 10-year period, a $100,000 investment in the S&P/TSX composite dividend index, the stocks benchmark in Canada, would have resulted in $200,797.37 of buying power, thanks to its inflation-adjusted annualized return of 7.22 percent. In addition, investors should also consider how real interest rates (i.e. bank deposit rates minus inflation) affect their returns. From January to February 2023, the annual nominal interest rate on three-month term deposits in most Asian countries or regions varied from 2.5 percent to 5.4 percent. Then there’s deposit rates However, when adjusted for changes in the consumer price index during the same period, the real three-month time deposit annual interest rate ranged from negative 5.2 percent to 1.09 percent. “History tells us that equities, bonds, and some income-oriented investments have the potential to deliver higher long-term returns than cash and could potentially outstrip inflation,” MIM’s report stated. From 2009 to 2022, compounded annual nominal returns for Asian equities and bonds were 8.15 percent and 4.38 percent, respectively. Real estate investment trusts in the Asia-Pacific region generated an annualized return as high as 11.38 percent. The post Losing cash while holding it appeared first on Daily Tribune......»»
BSP junking LIBOR as rates benchmark
The Bangko Sentral ng Pilipinas and market stakeholders have agreed on a new overnight rate that will replace the London Interbank Offered Rate or LIBOR this month, central bank governor Felipe Medalla said on Wednesday. Medalla said the new overnight or ON rate will be generated by translating the 28-day BSP bill rate to its ON equivalent. This new ON reference will be effective on or before 30 June 2023. Medalla added that the market’s agreement on the new ON rate is a “major milestone” in the transition away from LIBOR. “The new ON rate will provide a reliable and transparent benchmark for pricing short-term financial instruments,” Medalla said. “This will help to ensure the smooth functioning of the financial markets,” he added. Credible curve In addition to the new ON rate, the BSP and market stakeholders also discussed the need for a credible yield curve. A yield curve is a graph that shows the relationship between interest rates and maturities. It is used by investors to assess the risk of different investments. Medalla said that a credible yield curve is essential for the efficient functioning of the financial markets. “Since macro-financial decisions are based on these benchmark risk prices, having a credible yield curve is in everyone’s best interest,” Medalla said. He also pointed out the necessity of having a yield curve based on “active trading of marketable securities.” “This will ensure that the yields are accurate and reflective of the true risk of the underlying assets,” he added. The central bank chief said the BSP and market stakeholders agreed that the start of January 2024 would be the “fighting target” for having a credible yield curve in place. Another central bank official said that Philippine banks still have transactions worth billions of pesos tied to LIBOR. “Global markets need alternative means to price. This is the tentative solution,” Bangko Sentral ng Pilipinas assistant governor Johnny Noe Ravalo said in the same briefing The LIBOR rate, which had a global linkage of $265 trillion at the start of 2021, has served as a benchmark rate for a wide range of financial instruments, such as credit cards, corporate loans, mortgages, and derivatives. The post BSP junking LIBOR as rates benchmark appeared first on Daily Tribune......»»
BSP to replace LIBOR with new ON rate
The Bangko Sentral ng Pilipinas and market stakeholders have agreed on a new overnight rate that will replace the London Interbank Offered Rate (LIBOR) this month, central bank governor Felipe Medalla said on Wednesday. In a media briefing, Medalla said the new ON rate will be generated by translating the 28-day BSP bill rate to its ON equivalent. This new ON reference will be effective on or before 30 June 2023. Medalla added that the market's agreement on the new ON rate is a "major milestone" in the transition away from LIBOR. "The new ON rate will provide a reliable and transparent benchmark for pricing short-term financial instruments," Medalla said. "This will help to ensure the smooth functioning of the financial markets," he added. In addition to the new ON rate, the BSP and market stakeholders also discussed the need for a credible yield curve. A yield curve is a graph that shows the relationship between interest rates and maturities. It is used by investors to assess the risk of different investments. Medalla said that a credible yield curve is essential for the efficient functioning of the financial markets. "Since macro-financial decisions are based on these benchmark risk prices, having a credible yield curve is in everyone's best interest," Medalla said. He also pointed out the necessity of having a yield curve based on "active trading of marketable securities." "This will ensure that the yields are accurate and reflective of the true risk of the underlying assets," he added. The central bank chief said the BSP and market stakeholders agreed that the start of January 2024 would be the "fighting target" for having a credible yield curve in place. Another central bank official said that Philippine banks still have transactions worth billions of pesos tied to LIBOR. “Global markets need alternative means to price. This is the tentative solution,” BSP assistant governor Johnny Noe Ravalo said in the same media briefing The LIBOR rate, which had a global linkage of $265 trillion at the start of 2021, has served as a benchmark rate for a wide range of financial instruments, such as credit cards, corporate loans, mortgages, and derivatives. The post BSP to replace LIBOR with new ON rate appeared first on Daily Tribune......»»
BSP, MARKET agree to replace LIBOR with ON
The Bangko Sentral ng Pilipinas (BSP) and market stakeholders have agreed on a new overnight (ON) rate that will replace the London Interbank Offered Rate (LIBOR) this month, central bank governor Felipe Medalla said on Wednesday. In a media briefing, Medalla said the new ON rate will be generated by translating the 28-day BSP bill rate to its ON equivalent. This new ON reference will be effective on or before 30 June 2023. Medalla added that the market's agreement on the new ON rate is a "major milestone" in the transition away from LIBOR. "The new ON rate will provide a reliable and transparent benchmark for pricing short-term financial instruments," Medalla said. "This will help to ensure the smooth functioning of the financial markets," he added. In addition to the new ON rate, the BSP and market stakeholders also discussed the need for a credible yield curve. A yield curve is a graph that shows the relationship between interest rates and maturities. It is used by investors to assess the risk of different investments. Medalla said that a credible yield curve is essential for the efficient functioning of the financial markets. "Since macro-financial decisions are based on these benchmark risk prices, having a credible yield curve is in everyone's best interest," Medalla said. He also pointed out the necessity of having a yield curve based on "active trading of marketable securities." "This will ensure that the yields are accurate and reflective of the true risk of the underlying assets," he added. The central bank chief said the BSP and market stakeholders agreed that the start of January 2024 would be the "fighting target" for having a credible yield curve in place. Another central bank official said that Philippine banks still have transactions worth billions of pesos tied to LIBOR. “Global markets need alternative means to price. This is the tentative solution,” Bangko Sentral ng Pilipinas assistant governor Johnny Noe Ravalo said in the same media briefing The LIBOR rate, which had a global linkage of $265 trillion at the start of 2021, has served as a benchmark rate for a wide range of financial instruments, such as credit cards, corporate loans, mortgages, and derivatives. The post BSP, MARKET agree to replace LIBOR with ON appeared first on Daily Tribune......»»
Making MIF work (2)
Another oft-repeated criticism of the MIF is the source of its initial capitalization. The original version had the SSS and GSIS mandatorily stepping up to fund the MIF which raised the hackles of the public, not only because such action might be legally infirm but more so because of the risks the investment could pose to the stability of the pension funds. To address these concerns, the final version limits the initial funders of P125 billion in paid-up capital to LandBank, DBP and BSP. Landbank’s share of P50 billion translates to about 22 percent of its present net worth and roughly its projected income for the next 15 months. While for DBP, its contribution of P25 billion comes to about 8 times its 2022 net income. On the other hand, BSP’s initial share of P50 billion, about 45 percent of its net worth, has been the critics’ loudest carp and, in my view, a valid disquiet that this could have a potentially deleterious effect on the BSP’s sacrosanct ability to defend the stability of our financial system, particularly during a black swan event. The recent banking ruckus in the US and Europe is so fresh in everyone’s mind that an unimaginable, unexpectedly similar scenario could just as easily arise. How about the eruption of South China Sea hostilities or a resurgent deadly corona variant triggering a wholesale foreign exchange flight to safer shores? Or a major overleveraged conglomerate going under dragging in the process a handful of too big to fail creditor banks to the deep end of a full scale banking run? So why was the capitalization structured this way? Since the law actually refers to the National Government, why wasn’t this just budgeted and sourced from appropriations? My guess: with various pressing post-Covid needs competing for scarce funds, I think budgeting for the MIF would have been easily blown out of the water by the legislators. Thus this approach. Packaged separately and promoted as a stand-alone sovereign investment fund and hinting at possible private sector participation, particularly foreign, would have had better prospects of passage, to which I agree. But where then to secure the capital? A logical source that would have been non-controversial are the various properties of the government located in prime areas that would be a magnet for attracting the major developers. The bill actually refers to this possibility. It is definitely not too late to identify in the IRR a listing of target properties. In addition, I am certain that Landbank, DBP and even BSP have their share of ROPOAs (real and other properties owned or acquired) composed of foreclosed mortgaged properties. There is already even a law, FIST (Financial Institutions Strategic Transfer), covering such a structure that is just waiting for its IRR to be published for the law to be immediately operational. The recent banking ruckus in the US and Europe is so fresh in everyone’s mind that an unimaginable, unexpected similar scenario could just as easily arise. But notwithstanding the capital infusion via properties being immensely doable, the fund would still need to have a respectable level of liquidity at the outset to have the market credibility to take on its avowed goals. How could this be accomplished? We need not look too far for possible comparable models. The REITs (real estate investment trust) of late have proven to be quite a popular investment vehicle. Their IPOs have generally been a smashing success. So why not have a subset fund of the MIF list as a REIT with pre-identified cornerstone big real estate players as strategic partners. Such an IPO would surely resonate with the retail and institutional investors and, if the market capitalization is large enough and its shares widely distributed, would likely generate post-IPO liquidity and, more significantly, create market determined valuations of the underlying assets. Another angle to explore in order to secure immediately some initial liquidity is for the capital commitments to come in tranches as the actual requirements arise. After all, I can’t imagine there is already an immediate investment that has been lined up at this stage. Surely, the initial requirements would just essentially be for the mobilization phase of organizing the MIF. I believe such a process will not unduly disturb the current financials of the founding GFIs and could provide some breathing space to prepare for the eventual but gradual infusions. Again, I believe there is nothing in the final bill that could preclude the IRR from incorporating these tweaks. Until next week… OBF! For comments, email bing_matoto@yahoo.com. The post Making MIF work (2) appeared first on Daily Tribune......»»
BSP to absorb P360B excess liquidity
The Bangko Sentral ng Pilipinas will absorb P360 billion in excess liquidity from its recent cut in the reserve requirement ratio, British bank HSBC said on Friday. In an emailed commentary, HSBC economist Aris Dacanay clarified that the RRR cut by 250 basis points (bps) for major banks would cause "much extra liquidity." He explained that BSP's relief measure would also end on 30 June, coinciding with the reserves ratio reduction. "We estimate the net effect to be P87.7 billion. This will be a net injection of liquidity in the system, but a limited one, given that it represents just 6.3 percent of the excess liquidity currently being absorbed by the BSP," Dacanay said. He explained that the RRR cut "will be slightly larger than the relief provided by the pandemic-era measures on reserves." However, he estimated that the net effect on liquidity would be "positive but limited." According to Dacanay, the market had anticipated a smaller reduction in the RRR of 200 bps, aligning with the expiration of the relief measure that permitted banks to use loans extended to micro, small, and medium enterprises and eligible large enterprises to meet the reserve requirement. As of April, banks had used P302.4 billion in loans as an alternative compliance method for the reserve requirement. Among this total, P236.9 billion were loans to MSMEs, while P65.5 billion were borrowed by large independent enterprises not affiliated with conglomerates. However, Dacanay pointed out that the BSP's securities facility, which now includes additional tenors and the introduction of 56-day BSP bills on 30 June, enables the central bank to effectively absorb the excess money supply. This suggests that the central bank is adequately prepared to address surplus liquidity. "As communicated by the BSP, we don't think the RRR cut will affect monetary policy and the central bank's battle against inflation," Dacanay said. "On the same day as the RRR cut, the BSP will be issuing its new tool to absorb liquidity in the system -- the 56-day BSP bill. The liquidity injected by the RRR cut will likely be absorbed by this new tool on that same day," he added. He added that "the timing (of the RRR cut) is important since without the relief measures expiring, the RRR cut may be interpreted as a dovish signal by the BSP at time when inflation is high." The post BSP to absorb P360B excess liquidity appeared first on Daily Tribune......»»
Inflation control tool relaxed
The Bangko Sentral ng Pilipinas will reduce the reserve requirement ratios by 250 basis points or bps for universal and commercial banks or U/KBs and non-bank financial institutions with quasi-banking functions. The central bank in a statement added that 200 bps will be cut for digital banks, and by 100 bps for thrift banks, rural banks, and cooperative banks. The moves bring the RRRs of U/KBs and NBQBs to 9.5 percent, digital banks to 6 percent, thrift banks to 2.0 percent, and rural and cooperative banks to 1.0 percent. The relaxed requirements shall take effect on the reserve week beginning 30 June 2023 and shall apply to the local currency deposits and deposit substitute liabilities of banks and NBQBs, according to the BSP. Goal is stable liquidity The reduction in reserve ratios is intended to coincide with the expiration of alternative modes of compliance with reserve requirements by end-June 2023 and thus ensure stable domestic liquidity and credit conditions. The operational adjustment is in line with the BSP’s ongoing efforts towards a more active and flexible approach to liquidity management through market-based monetary operations. This includes the inaugural offering on 30 June 2023 of the 56-day BSP Bill, which serves as an additional instrument for absorbing system liquidity. The BSP said the lower reserve requirements do not constitute any shift in the BSP’s monetary policy settings. The BSP said it continues to prioritize bringing inflation back “towards a target-consistent path over the medium term and will continue to signal its monetary policy stance through the key policy interest rate, or the rate on the overnight reverse repurchase facility.” The post Inflation control tool relaxed appeared first on Daily Tribune......»»
MIF won’t threaten LandBank, DBP
The prospect of the state-owned Land Bank of the Philippines or LandBank and the Development Bank of the Philippines or DBP collapsing as a result of their infusions into the Maharlika Investment Fund is overblown. National Treasurer Rosalia de Leon assured the public on Saturday that LandBank would remain strong even if the proposed Maharlika Investment Fund or MIF failed. De Leon made the assurance during the Saturday News Forum on the sovereign wealth fund into which LandBank is expected to contribute P50 billion of the MIF’s P125-billion seed capital. DBP, another state-run bank, and the national government are expected to contribute P25 billion and P50 billion, respectively, to the MIF. “LandBank has about P1.3 trillion in investible funds. It will allocate P50 billion to the MIF, less than 3 percent of its total funds. So that means its investment is minimal. It will not affect the prudential ratios imposed by the Bangko Sentral,” De Leon said. Small portion of banks’ assets “On the other hand, DBP will allocate just about 2.7 percent of its P850 billion in investible funds. So, once again, plenty of funds are available to address the needs of our industries, businessmen, private sector, and even our MSMEs (micro, small and medium enterprises) to meet their respective requirements,” she stressed. De Leon said LandBank, one of the country’s largest universal banks, is a “very stable bank” in terms of assets since it’s a government fund. The National Treasurer said the MIF bill passed by both houses of Congress has safeguards in place to prevent graft and corruption. MIF has external auditor De Leon said an external auditor will be appointed to oversee the use of the funds. The auditor will be responsible for ensuring that the funds are used following the law and that there is no misuse of the money. “Each section of this proposed law pertains to safeguards to ensure the protection of the public funds so that they can be directed towards the objectives for which the fund was established,” she said. The post MIF won’t threaten LandBank, DBP appeared first on Daily Tribune......»»
House adopts Senate version of Maharlika bill
MANILA, Philippines — The House of Representatives has accepted the Senate’s version of the controversial Maharlika Investment Fund (MIF) bill. A bicameral conference committee hearing was held on Wednesday to reconcile conflicting provisions between the chambers’ versions of the contentious proposal. House committee on banks and financial intermediaries chair and Manila 5th District Representative Irwin […] The post House adopts Senate version of Maharlika bill appeared first on Cebu Daily News......»»
MIF bill opened for amendments
The Senate on Tuesday opened the period of amendments for Senate Bill 2020, which seeks to create the controversial Maharlika Investment Fund. During the plenary session, Senate Minority Leader Aquilino “Koko” Pimentel III delivered a lengthy “turno en contra” speech to express his opposition to the passage of the MIF bill. In his speech, Pimentel raised doubts about the promise of profit from the MIF, stressing that it will only “lead us to the road of debt, debt, and more debt as if we’re not already swimming in debt of P13 trillion.” “What is most certain in the midst of all these uncertainties to be brought about by the MIF is that the endless road to their promised land will be built with the blood, sweat, and tears in the form of the hard-earned taxes paid by every Filipino,” he said. The lawmaker also flagged what he described as a “grave procedural error” that the upper chamber had committed. He noted that SB 2020 should have been referred to the Senate Committee on Government Corporations and Public Enterprises. “Having read the final version of the committee report more than once, I am more convinced now that the proper committee where the bill should have been referred to at the very start should have been the Senate Committee on Government Corporations not the Committee on Banks,” he said. To recall, Pimentel made a motion in January to change the referral of Senate Bill 2020 from Senator Mark Villar’s Committee on Banks, Financial Institutions, and Currencies to the Committee on Government Corporations and Public Enterprises. Villar is the principal author and sponsor of the proposed MIF bill. Pimentel’s motion, however, was denied after a total of 19 senators agreed to reject it. Only Pimentel and Senator Risa Hontiveros voted in favor of the motion. The post MIF bill opened for amendments appeared first on Daily Tribune......»»
Senate opens period of amendments for MIF bill
The Senate on Tuesday opened the period of amendments for Senate Bill No. 2020, which seeks to create the controversial Maharlika Investment Fund. During the plenary session, Senate Minority Leader Aquilino “Koko” Pimentel delivered a lengthy “turno en contra” speech to express his opposition to the passage of the MIF bill. In his speech, Pimentel raised doubts about the promise of profit from the MIF, stressing that it will only “lead us to the road of debt, debt, and more debts as if we're not already swimming in debt of P13 trillion.” “What is most certain in the midst of all these uncertainties to be brought about by the MIF is that the endless road to their promised land will be built with the blood, sweat and tears in the form of the hard-earned taxes paid by every Filipino,” he said. The lawmaker also flagged what he described as “grave procedural error” that the upper chamber had committed. He noted that Senate Bill No. 2020, or the proposed measure seeking the creation of the Maharlika Investment Fund, should have been referred to the Senate Committee on Government Corporations and Public Enterprises. “Having read the final version of the committee report more than once, I am more convinced now that the proper committee where the bill should have been referred to at the very start should have been the Senate Committee on Government Corporations not the Committee on Banks,” he said. To recall, Pimentel made a motion in January to change the referral of Senate Bill No. 202 from Senator Mark Villar’s Committee on Banks, Financial Institutions, and Currencies to the Committee on Government Corporations and Public Enterprises. Villar is the principal author and sponsor of the proposed MIF bill. His motion, however, was denied after a total of 19 senators voted to reject it. Only Pimentel and Senator Risa Hontiveros voted in favor of the motion. ‘History repeats itself’ Meanwhile, a repetition of history happened during Monday’s marathon session which ran until early Tuesday after the supermajority once again flexed its muscle in the chamber. This, after Pimentel made a motion to extend his interpretation on the MIF bill to the next day, which, however, was rejected by Villar. Villar justified that all questions from those who interpellated in the past days were already answered. “I object. I think we've debated this extensively and I've answered all the interpellations. And without prejudice to the amendments being proposed, I'd like to object and move to close interpellation," he said. Senate President Juan Miguel “Migz” Zubiri supported Villar’s claim, stressing that the supposed session would be for the “turno en contra”. The deadlock prompted Senate Majority Leader Joel Villanueva to open the session to a vote, where the minority was ultimately outvoted by the majority, 2-11. Only Hontiveros and Pimentel voted in favor of the motion. The post Senate opens period of amendments for MIF bill appeared first on Daily Tribune......»»
Left holding the bag
“A leap of faith into the great unknown.” That’s how a worried Senator Francis Escudero described the venture that two state-owned banks would be legislated into making with the passage of the Maharlika Investment Fund law. That’s the same leap that the Government Service Insurance System and Social Security System were asked to make when the MIF idea was first floated last year, only for the state insurers to be dropped from the kitty pool amid the uproar and backlash. By their very nature, banks loan money and invest, but they have always had the option of where to put in their moolah. However, in the case of the Land Bank of the Philippines and the Development Bank of the Philippines, as captive investors, they’re in for the MIF ride, whether the road is bumpy or not. And that’s what troubles Escudero as he said that “as presently worded” in the Senate’s MIF bill, he could not see provisions detailing the bare minimum that the two banks’ investments — initially P50 billion for LandBank and P25 billion for DBP — would make. Senate hearings have established that the two government banks earn between six to eight percent of loaned or invested money, thus Escudero reasoned out that it may be financially sound to put at seven percent the threshold (or minimum) return on equity of LandBank and DBP. The senator warned that the banks cannot be allowed to go “bankrupt” because of the unsettled RoE and, if I may add, because of a failed venture which, in business, is almost always a possibility as turning in profits. Reading between the lines, the concern may be of the MIF making money but with the two banks being left holding the bag, left out of the profit-sharing due to a rushed MIF law that did not put in black and white a matter as simple as pegging the RoE. Naysayers have warned that the MIF may just end up as one huge corruption enterprise as the corporation tasked to manage the fund invests in a mixed bag of instruments like local and foreign bonds, equities, and foreign currencies. Here is where Congress should ensure that the MIF law would have enough safeguards not only for the two banks but also for the other players, including the government that will be infusing taxpayers’ money and state earnings. If the MIF is to succeed in promoting economic growth and development in the Philippines, the operations of the Maharlika Investment Corporation must be fully transparent. At the same time, whatever financial exposure that LandBank and DBP would have in the MIF should be of such amounts that losing them in a soured investment vehicle would not endanger the fulfillment of their core mandate. LandBank and DBP are primarily tasked to ensure loans are available for farmers and small and medium enterprises which, as admitted by an analyst of a commercial bank, are underserved by private banks and lenders because they are not as profitable. With this concern, there should be a ceiling as to what portion of their financial muscles can LandBank and DBP be allowed to put into the MIF. Again, this is left to the sound judgment of legislators who, with the law they would pass, would tie the hands of both LandBank and DBP. Let’s just hope that the lunacy and vested interests that marked the passage of laws now breaking the backs of Filipinos, like the Oil Deregulation Law, would be absent in the crafting of the MIF. Here, this Contrarian may be too overly optimistic. The post Left holding the bag appeared first on Daily Tribune......»»
Escudero: MIF bill a ‘leap of faith into great unknown’
Senator Francis Escudero is still contemplating the uncertainties in the return of equity threshold compulsory to the two state-owned banks as envisioned through the ‘Maharlika’ Investment Fund or MIF. Escudero has called on for more “earning guarantees” in the MIF bill, which the Senate intends to approve before the legislative break comes next week, saying that the seed money put by the Land Bank of the Philippines and the Development Bank of Philippines Maharlika Investment Corporation or MIC, must earn more than its current average investment yield of 6 percent. The senator warned that “without benchmark in yields”, the LBP and DBP will be earning less than 6 percent of their income threshold. “The idea is that the Land Bank and DBP should grow the money and not go bankrupt. Remember, the bill makes their equity compulsory. So in exchange, will there be guarantees as to their returns as well?,” said Escudero, who used to chair the Senate committee on banks, financial institutions, and currencies committee. Escudero said the bill, as presently worded, "is a leap of faith to the great unknown.” He added he has yet to hear a full explanation of how much the two banking giants will earn from their Maharlika investments. "Landbank and DBP, during the hearings, said they were earning on average 6 to 8 percent. So, let us average it up at 7 percent. You have to give Landbank and DBP a return of at least 7 percent per annum on what they invested in MIC. On top of that is the 2 percent administrative fee cap the MIC may use,” he pointed out. Senate Bill 2020 or MIF states that the total authorized P500 billion in capital stocks of the MIC, the initial P125 billion worth of MIC common stocks to be subscribed by the national government amounting to P75 billion shall be fully paid respectively—LBP for P50 billion and DBP for P25 billion. "Then we have to factor in inflation. So easily, the yield will be in the two-digit zone. In any investment pitch, the income output is the most important bottom line. An investment is made because one is convinced that it will make money. Not behest. Not something coerced through legislation,” Escudero pointed out. While the proposed measure allows the two banks to seek regulatory relief from the Central Bank if their position falls below standards, Escudero stressed: "This should not happen." “And to dangle this as the standard reply to issues validly raised is not the comforting answer we want to hear. Once a regulatory relief is sought "that means the banks already lost a lot of money," he said. The post Escudero: MIF bill a ‘leap of faith into great unknown’ appeared first on Daily Tribune......»»
LGU LOAN MORATORIUM ACT
MALAKING bagay at tamang-tama lalo sa panahon ng pandemya dulot ng Covid-19 ang isinusulong na House bill ni Navotas City Rep. John Rey Tiangco, ang HB 6899 o ang LGU Loan Moratorium Act. Kaya naman, agad ang pasasalamat nito sa Committee on Banks and Financial Intermediaries at kay Quirino Rep. Junie Cua, ang chairman ng […] The post LGU LOAN MORATORIUM ACT appeared first on REMATE ONLINE......»»
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