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BSP mulls 7-year staggered bank compliance on valuation reserves |
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(09 February 2004, Monday - Manila Bulletin)
The Monetary Board, the policy-making body of the Bangko Sentral ng Pilipinas (BSP), is considering granting an additional three-year period for banks to comply with its valuation reserves from a seven-year staggered compliance to 10 years attract more banks to subscribe to the special purpose vehicle (SPV). |
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"We are looking at staggering the valuation reserves up to 10 years from seven years so that there will be more SPV take up," BSP Deputy Governor for bank supervision and examination Alberto V. Reyes said.
The additional three-year period is part of the incremental incentives the monetary authorities are seriously contemplating to lighten the financial load of banks availing of the SPV law. In an economic briefing held last week, BSP Deputy Governor for banking services, research and treasury Amando M. Tetangco Jr. disclosed the monetary authorities are reviewing the SPV regulations to determine the possibility of offering incentives to banks to consider SPV as an avenue to clean its balance sheet saddled with loans that have turned sour. "The BSP is in the process of reviewing the regulations to see what adjustments could be done to encourage more SPV availments," Tetangco said. The SPV Law, which was passed in 2002 and took effect April 2003, allows banks to unload their non-performing assets (NPAs) at a discount through direct sale or its transfer to an asset management firm, which they can own up to five percent equity. Under the law, banks are exempted from the documentary stamp tax, capital gains tax and the 10 percent valueadded tax plus a 50 percent reduction in fees on the sale or transfer of their assets. However, despite these privileges, the BSP observed there has been no concrete availment of the SPV, specifically on the NPAs to an asset management firm, otherwise known as SPV, at a discount. Last week, Reyes admitted that no bank has so far completed a bulk sale of NPAs to an SPV. NPAs refer to the banks’ combined level of non-performing loans and real properties-owned or acquired assets. "We would like to see more SPV transactions," said Tetangco, justifying the current review of the regulations and the planned "adjustments" to attract banks to subscribe to the SPV law. The monetary authorities are pushing banks to avail of the incentives as provided in the SPV Act of 2002 because of its limited timetable. In order to prevent any possible abuse, the lawmakers introduced a sunset provision for banks to avail of the tax incentives, limiting it only to until April 8 of next year. (FCS) home | latest news |
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