JUNE 24, 2013

NR # 3144

Solon to seek infusion of capital to invigorate coop banks

A lawmaker will seek a prudent and strategic remedy to save financially distressed cooperative banks in the coming 16th Congress. Rep. Cresente Paez (Party-list, COOP NATCCO) said he would propose the establishment of a Provident Endowment and Viability Enhancement Fund for the rehabilitation of cooperative banks in financial distress. The proposed program seeks to transform cooperative banks into progressive economies of scale through the infusion and provision of capital and regulatory incentives that shall be included in my proposal, Paez said. Paez said cooperative banks are part of the rural banking system and the Bangko Sentral ng Pilipinas (BSP) classifies them as rural banks. As one of the vital sources of financing in the countryside, the rural banking sector continues to deliver sustainable and market-driven financial services to the agricultural sector and the enterprising households, Paez said. Paez expressed apprehension over reports that some cooperative banks are in trouble and also under the Prompt Corrective Action (PCA) by the BSP due to capital deficiency. Paez said the government stands to lose millions of pesos every time a cooperative bank is foreclosed by the BSP due to a PCA failure. He proposed to economically invigorate cooperative banks through the provision of technical guidance, financial assistance and other services. In my proposal, a Cooperative Bank Enhancement and Rehabilitation Program (CBERP) should be provided and a Cooperative Bank Security and Rehabilitation Fund should be established for this purpose, Paez said. Paez said the program intends to solidify the economic and institutional structure of the Philippine Cooperative Banking System by encouraging the strategic merger and consolidation of eligible individual cooperative banks thereby pooling their resources into a larger, more unified and stronger cooperative. Under the proposal, an amount of P500 million shall be appropriated by the National Government as initial fund through the joint participation of the BSP, Land Bank of the Philippines (LBP) and the Philippine Deposit Insurance Corporation (PDIC) as partnerbenefactors in the accomplishment of the program. (30) mvip