• The Financial District


The toxic assets of banks in the country is expected to quadruple from just 5 percent to 20 percent, according to data from the Bankers Association of the Philippines (BAP) umbrella organization of commercial and universal banks in the country.

This surge in the toxic assets as a result of the Covid 19 pandemic is what prompted Sen. Imee Marcos to propose a superbody to clear the books of the banks of non-performing loans (NPLs) or loans that are not being paid by borrowers.

Marcos’ Senate Bill 1646 dubbed the Financial Institutions Strategic Transfer (FIST) Act, aims to create specialized asset-managing corporations that would clean up the balance sheets of lending institutions by acquiring their bad loans and stagnant properties.

“Unpaid loans and other non-performing assets are the virus infecting the country’s financial system and will test its resilience in the coming months,” Marcos said.

Data from the Bangko Sentral ng Pilipinas (BSP) show that the gross NPL of the banking system as of January 20 stood at P234 billion and in February it was at P239 billion and by March it was P248 billion.

And as per Marcos, who is the chairman of the the Senate Committee on Economic Affairs, the NPLs would rise by 20 percent due to the pandemic that would make it harder for borrowers to pay back and would likely increase the bulk of non-performing assets in government financial institutions, private banks, investment houses, and other credit-granting entities.

“Let’s not be complacent and plan for the months ahead. While the government has so far managed to keep the peso steady against the dollar with a strong balance of payments and international reserves, how long will this last if local businesses and exports remain weak?” Marcos asked.

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