EastWest Bank not looking to sell soured assets via FIST Law

EAST WEST Banking Corp. (EastWest Bank) President and Chief Executive Officer Antonio C. Moncupa, Jr. said the bank is “not very keen” on availing of the provisions of the Financial Institutions Strategic Transfer (FIST) Law as they remain in a stable position.

“My view is that the banking industry remains resilient and that it does not have that urgency [to offload bad assets as was seen] in 1997. Personally, for EastWest, I’m not very keen on it,” Mr. Moncupa said in an interview with ANC on Tuesday.

Republic Act No. 11523 or the FIST Law was signed in February. It allows financial institutions to sell their nonperforming assets (NPAs) to FIST corporations, giving lenders a chance to clean up their balance sheets. In turn, FIST corporations will be given tax perks.

“That really depends on your position but I think we’re in a really good position, the industry as a whole. That’s very positive that there’s less need for that (selling bad assets),” Mr. Moncupa said.

Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno has said the FIST will serve as a “fallback” for lenders as the banking industry’s fundamentals remain solid, noting the sector’s capital adequacy ratio remains well above the minimum regulatory requirement.

The Special Purpose Vehicle Act, which was a similar measure during the Asian Financial Crisis in 1997, was passed in 2002. Mr. Diokno said banks sold around 30% of their NPAs to asset management companies through the measure. He noted that 30% of banks’ NPAs as of Dec. 31 was equivalent to about P152 billion.

Mr. Moncupa also said banks are seeing lower demand for consumer loans.

“Households are very, very careful protecting what they have and trying to save because I’d like to think there are still remaining uncertainties with regards to this virus,” he said.

CITIGROUP
Meanwhile, Mr. Moncupa said they need more data to see if they would join other local banks in their intent to acquire the retail portfolio of Citigroup, Inc. in the Philippines. The US-headquartered banking giant has announced it would leave retail banking in 13 markets in Asia-Pacific, including the Philippines.

“I think any bank in retail banking will pause and try to see the opportunity. They’re one of the top credit card issuers, healthy wealth management for mass and emerging affluent, and good deposit base,” Mr. Moncupa said.

Officials from Bank of the Philippine Islands and BDO Unibank, Inc. last month said they are interested in acquiring Citi’s local retail base.

EastWest Bank’s net earnings increased by 4.8% to P6.5 billion in 2020 on the back of high interest income and strong trading games.

The Gotianun-led lender’s shares closed at P9.55 apiece on Tuesday, down by 28 centavos or by 2.85% from its previous finish. — L.W.T. Noble