Transcript of Sen. Grace Poe's Speech

Mr. President, as chairperson of the Senate contingent to the bicameral conference committee on the proposed Financial Institution Strategic Transfer Act, I now have the privilege to report to the body the approved version of our bill.

The bicameral conference committee agreed to use the Senate version as the working draft since the House adopted most of the provisions in our version. With the hard work of our colleagues, Senators Recto and Drilon, as Senate conferees, and Representatives Cua, Quimbo and Tiangco as House conferees, we were able to reconcile major conflicting provisions of Senate Bill No. 1849 and House Bill No. 6816.

Mr. President, among the agreements settled by both panels are the following:

a. First, only the private sector shall be allowed 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;

b. Second, foreign FISTCs shall not be allowed to take part in the bidding and foreclosure of real property. The House version gave option for foreign FISTCs to easily pay off the penalty in case they are unable to transfer the property after five years. This might result in perpetual ownership of land which is in violation of Republic Act 7042 or the Foreign Investments Act. Thus, we deleted the provision;

c. Third, specific periods were lowered to prevent delay in offloading of assets. In the old SPV law, banks found it difficult to immediately offload non-performing assets due to long settlement period between the borrower and the bank, as well as due cases being filed in court.

So, from the original proposal of 180 days, both panels agreed to lower the period of considering loans and other financial assets as non-performing loans to 90 days.

Similarly, we also agreed to retain the borrower's right to renegotiate loans as we recognize the need to also assist borrowers, but lowered the period of restructuring from 90 days to 30 days.

Together, this gives the borrower at least 120 days to pay off or renegotiate a loan and prevent the transfer of the asset to a FISTC;

d. Fourth, the provision requiring prior consultation with the Philippine Competition Commission before an asset is transferred has been deleted. The panel saw this as another administrative layer that may cause delay in the disposal of assets;

e. Fifth, we also deleted the provision reiterating the investigative powers of SEC and DOJ over violation complaints on the Anti-Dummy Law in relation to FIST transactions. 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;

f. Sixth, to prevent delay in the implementation as what happened in the old SPV law and to respond to the need to immediately enact the bill, the panel agreed to adopt the Senate proviso that the non-promulgation of the IRR shall not prevent the implementation of this Act upon its effectivity;

g. And lastly, the bicameral conference committee agreed to extend the applicability period to assets that have become non-performing from Dec. 31, 2020 to Dec. 31, 2022 considering that NPLs build over time. And what we are seeing now is not yet the full impact of the pandemic.

Mr. President, the FIST Act is seen to help cushion the adverse impact of the pandemic to our financial sector. 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. If our financial institutions are in good shape, they can help businesses and save jobs in return.

Mr. President, 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. I wouldn't have been able to do this without the expertise and patience, again, of Senator Drilon and Senator Recto. They guided us every step of the way, unyielding in their principles that it should be a fair and effective law, and so I thank them.

We know what is coming and as policymakers, we are given the chance to proactively respond to it. Thus, it is my humble submission that the bicameral conference committee report on the disagreeing provisions of Senate Bill No. 1849 and House Bill No. 6816 on the Financial Institutions Strategic Transfer Act be ratified by this Chamber.