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Rediscount loans fall 77.7% in 2020

LOAN AVAILMENTS from the central bank’s rediscount window plummeted in 2020, with banks tapping the facility for just four months as liquidity remained ample despite the coronavirus crisis.

Credit secured by lenders from the peso rediscount facility of the Bangko Sentral ng Pilipinas (BSP) stood at P26.9 billion as of end-2020, slumping by 77.7% from the P122.167 billion logged in 2019.

“There are no availments under the peso rediscount facility for the month of December 2020,” the BSP said in a statement on Monday.

Banks only tapped the peso rediscount window in March, April, August, and September.

Meanwhile, banks did not tap the Exporters’ Dollar and Yen Rediscount Facility for the whole year.

The rediscount facility lets banks have access to additional liquidity by posting their collectibles from clients as collateral. In turn, lenders can use the extra cash, which could be in peso, dollar, or yen, to lend more to their corporate or retail clients and service unexpected withdrawals.

“With the BSP shedding 200 basis points (bps) last year, it is clear that banks were amply supplied with liquidity,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in an e-mail.

He said rediscount loans could rise once the central bank starts hiking rates.

“We may see some tightening toward the end of this year or early 2022,” Mr. Asuncion said.

The BSP last year cut benchmark interest rates by a cumulative 200 bps to bring yields on its overnight reverse repurchase, lending, and deposit facilities to record lows of 2%, 2.5%, and 1.5%, respectively.

The central bank had said its aggressive easing measures were meant to support the virus-stricken economy.

BSP Governor Benjamin E. Diokno earlier said the policy adjustments have infused about P2 trillion in liquidity into the financial system.

Meanwhile, the applicable rate for peso rediscount loans in January is set at 2.5% — which is the current lending rate — regardless of maturity.

The dollar- and yen-denominated credit line will be priced at 2.23838% and 1.9175%, respectively, regardless o-f maturity. — L.W.T. Noble

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