1. Disaster Preparedness and Management Presentation by: Mr. Rogelio A. Encinas Manager II/Head Microfinance Examination Group Supervision and Examination I Bangko Sentral ng Pilipinas

2. Definitions Disaster Management – “an applied science that seeks by systematic observation and analysis of disasters, to improve measures relating to prevention, mitigation, preparedness, emergency response and recovery”. (Stuart Mathison, Foundation for Development Cooperation, September 2003)

3. Definitions Disaster Mitigation – “measures aimed at reducing the impact of a natural or man-made disaster on the community or nation; and the application of these measures to moderate or reduce the effects and impacts of current, or future disasters”.

4. The Disaster Cycle Disaster Response Rehabilitation Reconstruction Development Prevention Preparedness

5. Economic Coping Mechanisms “Low-stress” “Medium-stress” “High-stress”

6. “Low-Stress” Stopping regular saving Reducing consumption Short-term migration of one or more family member Borrowing from relatives and neighbors

7. “Medium-Stress” Using up savings Selling non-essential household assets Borrowings

8. “High-Stress” Selling productive assets Loan default

9. Impact of Natural Disasters on Banks Decline in inflow of cash Increase in outflow of cash Significant loss of capital Serious liquidity crisis

10. Business Continuity Plan (BCP) Objective Ensure minimal disruption of bank operations Minimize financial losses through lost business opportunities or asset deterioration Ensure timely resumption of normal operations Coverage Fire, Earthquake, Floods, Typhoon, Lahar, Political instability

11. Key Teams in BCP Emergency Action Team Ensures that people are safe Damage Assessment Team Contacts people/agency who will decide if situation is really a disaster Emergency Management Team Ensures the following: Retrieving critical and vital data from off-site Installing and testing systems Purchasing hardware/software Operating from the system recovery site

12. BSP Relief Programs Exclusion of arrearages of borrowers from the computation of past due ratio Grant of emergency loan Lifting of sanctions on and allowing the booking of allowances for probable losses on staggered basis for 5 years from approval date

13. BSP Relief Programs Lifting of sanctions and allowing the booking of valuation reserves on non-performing assets and real and other properties owned or acquired on a staggered basis for 5 years from approval Temporary suspension of reports to BSP and lifting of monetary penalties for non- submission and delays in submission of mandatory reports

14. BSP Relief Programs Moratorium and waiver of penalties of monthly payments to BSP for banks with ongoing rehab programs Waiver of penalties on legal reserves deficiencies

15. BSP Relief Programs Reduction of the 5% general loan loss provision to 1% for restructured loans Restructuring of outstanding rediscounting obligations Freezing of credit classification status of loan accounts for purposes of determining and booking loan loss provision to enable banks with rediscounting line to continue rediscounting and avail of liquidity assistance

16. BSP Relief Programs Postponement of ongoing or rescheduling of bank examination for those units whose fixed office facilities, records and equipment were disabled

17. Recovery Efforts/Actions Taken by Banks After the Disaster Restructured regular and microfinance loans to ease the pressure on the borrowers suffering from effects of typhoon Waived penalties on regular and microfinance loans Granted three-month moratorium on the payment of microfinance loans Accepted partial payments on principal or interest payments only on matured loans

18. Major Concerns of Banks After the Disaster Banks need additional financing to provide liquidity to normalize lending operations Increase in loan-loss reserves requires banks to apply for the staggered booking of valuation reserves to ease impact on capital Need for liquidity assistance from external sources Losses from calamities not covered by insurance

19. Thank You.