BIZ BUZZ: BSP vs BAP, redux
With a discredited global loan pricing benchmark set to be phased out by the end of business tomorrow, it remains to be seen how the Philippines’ financial system will move forward with its own interest rate setting system, no thanks to some thinly veiled, seemingly subconscious hostility between the monetary regulator and the country’s biggest banks.
We’re talking about the abolition of the London Interbank Offered Rate (or Libor) by June 30 in the aftermath of a rate-rigging scandal that first came to light overseas over a decade ago.
Once the global phaseout was announced, the Bankers Association of the Philippines (BAP) immediately got to work to develop an alternative scheme for setting interest rates that would then be used to price short and long term loans in the local financial system. Once ready, the BAP submitted it to the Bangko Sentral ng Pilipinas (BSP) for the latter’s approval.
Alas, the banking regulators sat on the proposal for two years, according to frustrated bankers who worked hard on the project. Earlier this month—with just days to spare before Libor’s phaseout—banks were summoned to the BSP to hear a new BSP proposal for a pricing mechanism that completely ignored BAP’s ideas, said the bankers.
“It’s like we never gave them a proposal two years ago,” said one exasperated banker. “The worst part is that they foisted this on us just last week, with the deadline just days away.”
After the regulators’ meeting with bankers last week, the BSP issued a statement to bankers saying that it wanted the new pricing system to have a “credible” yield curve (referring to the graphic representation of interest rate levels across different loan durations).
“So is BSP now saying that BAP’s proposal is not credible?” seethed another banker.
The question now is how will incoming BSP Governor Eli Remolona handle this delicate matter. Will he get off on the right foot with his banking constituents or the wrong one? Abangan!
—Daxim L. Lucas
PCCI choice for agri chief
Amid the myriad of problems hounding the local agricultural sector, the Philippine Chamber of Commerce and Industry (PCCI) said it has put together a short list of potential candidates, including an unnamed businessman in the local export industry.
PCCI president George Barcelon, whose group is touted to be the biggest business lobby in the Philippines, said that the roster includes other personalities from the private sector, but declined to provide specific details of the personalities on the list.
“There are stakeholders, those who are in the business, who are major exporters because they know things if you are in the business,” he said, when asked about the roster of personalities.
“What is important here is that you have somebody who has the trust of the President,” he added.
Despite the shortlist, Barcelon, who sits as the private sector representative at the Legislative Executive Development Advisory Council, said they have yet to submit the list to the President.
Almost three weeks ago, President Marcos said that no one has volunteered yet to take the reins at the Department of Agriculture, the only Executive department still without a Secretary.
