Senate ratifies FIST bill for non-performing assets

The Senate on Tuesday ratified the Financial Institution Strategic Transfer (FIST) bill which seeks to create specialized asset-managing corporations that would acquire bad loans and stagnant properties from embattled financial institutions.

"Pinoprotektahan nito ang kapital para mas maraming mapautang ang bangko pero binibigyan rin ng batas na ito nang pagkakataon ang mga napautang na makuha muli ang kanilang mga ari-arian na marahil ay nailit ng bangko. So, lahat po ay binigyan ng boses dito," Senator Grace Poe, sponsor of the bill, said in plenary.

Under the bill, a FIST corporation may invest in, or acquire non-performing assets from financial institutions; and engage third parties to manage, operate, collect, and dispose of these acquired assets.

Poe said the conflicting provisions of Senate Bill No. 1849 and House Bill No. 6816 had already been reconciled by the bicameral conference committee.

Among these is the agreement to allow only the private sector to form FIST corporations.

"It would be financially risky for government to be involved in acquiring non-performing assets as government revenue is down due to the pandemic," Poe said.

The Senate's bill however bars foreign FIST corporations from participating in the bidding and foreclosure of real property.

Poe said the provision in the House version which allows foreign FIST corporations to easily pay off the penalty in case they are unable to transfer the property after five years has been deleted because this can result in "perpetual ownership" of land—a violation of Republic Act 7042 or the Foreign Investments Act.

Further, the period of considering loans and other financial assets as "non-performing" was lowered to 90 days from the original 180 days.

There was also a provision that gave borrowers at least 120 days to pay off or renegotiate a loan and prevent the transfer of the asset to a FIST corporation.

The proposal to require prior consultation with the Philippine Competition Commission before an asset is transferred was deleted during the bicam, according to Poe.

The provision reiterating the investigative powers of the Securities and Exchange Commission and the Department of Justice over violation complaints on the Anti-Dummy Law in FIST transactions was also deleted.

"This is to remove apprehension among investors over being sued for something that existing laws already cover, and encourage more investments in the financial sector," Poe said.

Once enacted into law, the measure would apply to assets that have become non-performing from Dec. 31, 2020 to Dec. 31, 2022, considering that non-performing loans and assets build over time.

"If passed into law, financial institutions will be able to offload non-performing assets which will then promote investor and depositor confidence, and mitigate the effects of the crisis," Poe said.

"If our financial institutions are in good shape, they can help businesses and save jobs in return," she added.

The FIST bill is an economic measure certified urgent by Malacañang amid the COVID-19 pandemic. — DVM, GMA News