Diokno’s FIST law gives Philippine banks a boost, but do they need it?

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March 7 2021

Benjamin Diokno, governor of Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, hopes that a new law to create ‘bad bank’ asset management companies will reduce non-performing loan (NPL) ratios in the Philippines and stabilize a system shocked by Covid-19.

It is a move with a lot of historical precedent in Asia, but is it necessary?

The Financial Institutions Strategic Transfer (FIST) Act was signed by president Rodrigo Duterte on February 16, and a period of consultation on its implementing rules and regulations concluded on February 25.

It allows for the establishment of FIST corporations – basically, asset management companies commonly known as bad banks – which are authorized to acquire non-performing assets (NPAs) from financial institutions.

This allows the banks to strengthen their balance sheets during a time of financial system stress brought about by the Covid-19 pandemic.

Read the full article here

Chris Wright
Chris Wright
Chris is a journalist specialising in business and financial journalism across Asia, Australia and the Middle East. He is Asia editor for Euromoney magazine and has written for publications including the Financial Times, Institutional Investor, Forbes, Asiamoney, the Australian Financial Review, Discovery Channel Magazine, Qantas: The Australian Way and BRW. He is the author of No More Worlds to Conquer, published by HarperCollins.

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