Bsp Loans, Advances Total R117B By LEE C.

CHIPONGIAN October 14, 2012, 5:25pm The total loans and advances of the central bank to the government and banks amounted to R117 billion as of endApril, up 11.4 percent year-on-year. The Bangko Sentral ng Pilipinas (BSP) loan portfolio includes rediscounting loans, emergency loans, overnight clearing line (OCL), and loans to the Philippine Deposit Insurance Corp. (PDIC) and the National Government. Since January, the loans released by the BSP has been steadily inching up from R113.77 billion at the start of the year. The four-month total of R117 billion is however higher than the highest recorded month for loans and advances in 2011, which only peaked at R116 billion, based on current data. BSPs special liquidity facility or emergency loans amounted to over R3 billion. Emergency loans are granted at normal periods for the purpose of assisting a bank under financial pressures, so long as the bank applying for the facility was not insolvent and has the assets to secure advances. The OCLs are overdrafts and the facility or its availment totaled R1.5 billion. The budget for the peso rediscounting facility has been reduced over the past two years from R60 billion to R40 billion, and then R20 billion at any given time. The rediscounting loans for the period end-April totaled R12 billion which was 50.1 percent higher compared to the borrowed rediscount facility in the same period last year. PDIC is BSPs biggest borrower with loans amounting to slightly over P100 billion. These are original loans granted to the PDIC since 1993 and include interests and other balances. The banking co-regulator's assistance to closed banks is in the form of new cash infusion, purchase of assets and assumption of liabilities. If it cannot provide or if it has no available funds for these purposes, PDIC could apply for loans from BSP to finance assistance to banks. The loans extended by BSP to PDIC include the P4.59 billion granted to Allied Banking Corp. as the beneficiary bank for the assisted bank, Orient Bank in 1999; the P10 billion loans to BDO Unibank for First e-Bank in 2002; the P7.2 billion BDO loan to assist United Overseas Bank of the Philippines in 1999; the P1.778 billion loan to Bank of Commerce for Traders Royal Bank in 2002; and the P10.1 billion loan to Export & Industry Export Bank granted in 2006. Other BSP-backed PDIC loans were the P1.175 billion extended to Keppel Monet Bank in 1997; the P7.64 billion to Philippine Bank of Communications in 2004; P1.274 billion for Planters Development Bank; P23.9 billion for Philippine National Bank in 2001; and P20.5 billion for United Coconut Planters Bank in 2003. The last one was a P3 billion financial assistance to closed bank G7 Bank Inc. worth P3 billion in 2008. The BSPs Department of Loans and Credit report these figures. PDIC accounted for about 86 percent of total loans and advances. Under Monetary Board Resolution No. 188, the loans may be granted to the PDIC for insurance purposes and financial assistance, provided that there are systemic consequences of a probable failure or closure of an insured bank, that it is consistent with the monetary policy and that the overall resolution technique or rehabilitation plan is the least cost alternative to the BSP as opposed to non-intervention or closure of an ailing bank.