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Gov’t should hike share in PDIC to P45B

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By Joel Guinto
INQUIRER.net
First Posted 18:03:00 10/22/2008

MANILA, Philippines—The government will need to raise its contribution to the Philippine Deposit Insurance Corp. (PDIC) to P45 billion from P3 billion to cover the proposed increase of bank deposit insurance, PDIC president Jose Nograles said Wednesday.

“We are proposing an authority to ask government to contribute up to P45 billion. At present government contribution is P3 billion,” Nograles told a news conference at the Palace.

President Gloria Macapagal-Arroyo backs a proposal by her economic managers to increase the insurance coverage for bank deposits from P250,000 to P1 million to boost public confidence on local banks amid a meltdown in the US financial system.

Nograles said the state-run PDIC would not increase the required contribution from banks.

Budget Secretary Rolando Andaya said the government could allocate P45 billion to the PDIC, but the money would be released incrementally.

“Hindi naman ito isang bagsakan e [This will not be released all at once]… We’ll just finalize the numbers with the PDIC,” Andaya told the same briefing.

Arroyo sees the increase as a “proportionate response to the global uncertainties,” Executive Secretary Eduardo Ermita said Tuesday.

Ermita stressed that while the country’s banking system is stable the increase was felt necessary to help underline confidence.

Arroyo has ordered her economic advisers to thrash out the details of the proposed law with congressional leaders.

The central bank earlier said Philippine banks’ combined exposure to sub-prime securities was less than one percent of the assets of the country’s banking system.

The banks holding these assets have made provisions for potential losses.

Earlier Tuesday the Bangko Sentral ng Pilipinas said the non-performing loans on the books of the Philippines’ largest banks were 3.88 percent of their total assets in August, an improvement over the previous month’s 3.98 percent and the 5.28 percent ratio a year earlier.

Universal and commercial banks, which are allowed to engage in other financial services such as investment banking, now have bad loans totalling P91.53 billion compared to their total loan portfolio of P2.36 trillion.

The BSP gave no data for thrift banks.

“The industry sustained an improving trend for the past six months and kept the NPL ratio below four percent for the past three months,” it added.

The 1.07 percent month-on-month improvement was complemented by a 1.45 percent expansion in the total loan portfolio of universal and commercial banks. With Agence France-Presse

View article as posted on INQUIRER.net

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Written by joelguinto

WedUTC2008-10-22T13:41:54+00:00UTC10bUTCWed, 22 Oct 2008 13:41:54 +0000 22, 2006 at 12:45 pm10

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