CAMIGUIN Rep. Jurdin Jesus Romualdo is calling for the committees on banks and financial intermediaries and public accounts to conduct a joint inquiry in aid of legislation into the operations of the Land Bank of the Philippines (Landbank) and the Development Bank of the Philippines (DBP), particularly their lending practices.
Romualdo seeks to craft necessary legislative measures that will strengthen oversight of the risk management operations of government financial institutions, ensure accountability and transparency in the use of public funds, impose sanctions against bank officers and clients who will be found to have administrative and criminal liabilities over certain transactions, and preserve the financial integrity of Landbank and DBP.
The Camiguin solon claimed receiving reports that said banks lent a “huge” amount to an unspecified shipping corporation, which later defaulted when the loan became due and demandable.
“Both banks allegedly failed to foreclose (the corporation’s) assets and collaterals, some of which, particularly vessels are not reported to be decommissioned, non-operational and under maintenance,” Romualdo said in House Resolution (HR) 2095 which he introduced.
According to Romualdo, the joint inquiry should determine whether Landbank and DBP extend similar accommodations to favored clients, committing lapses in collateral evaluations and risk management, which he considered as detrimental to the banking industry, and may constitute violations of relevant Bangko Sentral ng Pilipinas (BSP) regulations on sound credit risk management practices.
BSP Circular 855, series of 2014, prescribes the minimum standard for collateral valuation, credit risk assessment and loan provisioning among financial institutions.
Romualdo also questioned whether such accommodations are sanctioned by the Credit Information Corporation and the Bankers Association of the Philippines.
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