|
The mandate of the Development Bank of the Philippines (DBP) is not
cast in stone, carved in granite and etched in Rushmorean
grandeur. If there is ever a statement of its mission, the ring is
more pedestrian, such as “Bank on Wheels.“ Such pedestrian and
pragmatic ambitions jibe well with its task, which simply is
spurring development.
Investing in Lehman Brothers? I don’t think it
is a priority in the investment portfolio of the DBP. Investing in
Lehman Brothers, the collapsed investment bank that got sucked up in
the whirlwind of greed-induced turmoil that rocked the financial
system of the US (and many parts of the globe), was definitely one
of the last things DBP, as per its sworn mandate, would engage in.
The news reports said otherwise.
The news reports tagged DBP as one of the
Philippine investors in Lehman Brothers. A $90 million placement was
made to Lehman by DBP. The story did not detail under whose
leadership the $90 million investment was placed by DBP. What is
clear is that the investment had vaporized, along with the money
invested in Lehman from prominent and obscure places across the
globe.
It was the only state-owned bank said to have
invested in Lehman Brothers.
The local business community —which have had
the sad experience of borrowing money from DBP—cannot reconcile
the bad investment of DBP with Lehman Brothers with the torture that
DBP imposes on local borrowers before the release of their loans.
There is more. The borrowing process at DBP is
not only torturous but agonizingly slow. From those who have had
borrowed money from DBP, the following is their story:
•The DBP has stiffer collateral requirements
than rural banks and thrift banks. The bank gives a borrower a loan
equivalent to 50 per cent of the value of the collateral, whether
this is an REM (real estate mortgage) or the chattel mortgage.
•The processing period, from application to the actual release of
the loans, takes at the very least five months. Six months of more
is the average release date of loans.
•There is no express lane for Triple-A borrowers. The DBP does not
recognize integrity and track record. We just don’t know about the
DOSRI and the cronies. It is on record that the DBP collapsed during
the Marcos time for releasing impossible amounts of loans to cronies
based on marginal notes from Mr. Marcos.
There is nothing in the lending practices of DBP
that fulfills its mandate as a “development bank.”
The $90 million bad investment made by DBP all
the more sours because it was revealed in the most inappropriate of
backdrops: the spike in the fuel and food prices, which in turn had
pushed inflation up.
The $90 million could have been used to:
• Help fund the construction by the private
sector of CNG stations across the country. One of the reasons the
transport industry has been slow in converting from diesel to CNG or
LPG engines is the total absence of CNG and LPG stations along the
major land transport routes.
• Help finance rice production loans. There is a credit squeeze in
the countryside and dearth of credit to rice farmers helped
intensify the rice production shortfall. Had DBP used part of the
$90 million to fund rice production, the problem would have not been
as worse as the supply and pricing problem two months ago.
• The $90 million could have been used to provide bridge financing
to companies that suffered most during the peak of the oil and food
price spikes.
Investing in Lehman Brothers at the expense of
fulfilling its development functions strips the DBP of its
hypocritical commitments. The transport and the farming
sectors—which the DBP failed to help during the crisis— feel
that the time is right for a change in the DBP nomenclature.
Why DBP hooked up with the stupid investments in
those failed Collateralized Debt Obligations (CDOs) acquired by
Lehman in a frenzy of greed and folly, at the expense of its mandate
of helping Philippines cities and rural areas in their development
activities, is beyond the transport and farming sectors.
But their sense is the DBP should cease and
desist in invoking its “development” mandate. This is just like
rubbing salt on an open wound.
mvrong@yahoo.com
|
