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The Bangko Sentral ng Pilipinas (BSP) said it is wary of loans being at risk of ending up in default as an effect of the devastation brought about by tropical storm Ondoy and typhoon Pepeng. The concern was raised by  BSP officer-in-charge Nestor Espenilla Jr. who said that the estimated retail loan affected in calamity areas is about P500 billion or 24% of the total banking industry’s loan portfolio of P2.3 billion.

During the 52nd Charter Anniversary forum of the Rural Bankers Association of Philippines, Espenilla told reporter on the sidelines, “The initial estimate of the overall loan exposure in areas affected by Ondoy and Pepeng is more than P500 billion. Of course, not all of that will be affected but even if you look at percentages, maybe one percent is already P5 billion.”

Espenilla added that “It is hard to tell, it is too soon to tell at this time. The P500 billion is the estimate of retail loan portfolio affected in the calamity areas.” The National Capital Region which experienced flooding at the heights of Ondoy accounts for about 30% of the country’s domestic output as measured by the gross domestic product.

The central bank’s Monetary Board has recently decided to earmark P5 billion in special rediscounting budget to help small and medium enterprises severely affected by Ondoy and Pepeng. It has also allocated additional rediscounting loans as nearly 98% of its P60-billion rediscounting budget has already been utilized.

Earlier, BSP announced that it decided to liberalize some reporting guidelines to help the banks who were severely affected by the calamity. Existing loans to bank clients in affected areas will be excluded from the computation of past due ratios of banks if such loans are restructured or given relief.

Additionally, general loan loss provision for restructured loans of borrowers in affected areas would be reduced to one percent from five percent, and penalties for delays in the submission of supervisory reports have also been suspended.

The BSP also gave a go-signal for banks to provide financial assistance to their officers and employees who were affected by the calamity on top of the existing approved Fringe Benefit Program.