WORLD LENDING PATTERN CHANGING - MANILA BANK CHIEF
International banks have radically
changed their attitudes towards debt and lending and debtor
nations will have to explore new methods of ensuring inflows,
Philippine Central Bank Governor Jose Fernandez said.
    "Commercial banks have tended to be rather difficult in
terms of new money for some time now," he told reporters at a
news conference. "Within the world there are enormous changes
taking place in attitudes of different banks."
    He said the banks were no longer flush with funds from the
post-1973 oil boom and were reluctant to lend money.
    "They don't have the same kind of money they used to have
... They find their whole deposit base eroding," Fernandez said.
Groups of major banks had decided that the international arena
was not to their liking.
    "They wind up with 7/8 (over Eurodollar rates) and who wants
7/8 really? It's nothing. They want to get the frills, but if
they are not big enough they don't get the frills."
    The Philippines on Wednesday announced it wanted to
renegotiate a debt restructuring accord it reached on March 27
with its 12-bank advisory committee, saying it wanted the same
terms as were granted to Argentina earlier this week.
    Argentina was granted a 19-year repayment at 13/16 points
over Eurodollar rates, the same historically low spread that
Mexico won last October, while the Philippines, which had
insisted on a deal similar to Mexico's, restructured 10.3
billion dlrs of its 28.2 billion dlr foreign debt at 7/8.
    Fernandez said the old type of new-money agreement, where
hundreds of banks were forced into involuntary lending by an
advisory committee that negotiated agreements with debtor
countries, was becoming increasingly difficult.
    He said involuntary lending proved useful in the two or
three years since the Mexican debt crisis in 1982.
    "But the present tendency has been that more and more of the
banks, specially the regionals or the small ones, have either
sold off their portfolios or simply by policy will not put up
any more money," Fernandez said.
    He said another disturbing development was the so-called
national quota approach adopted by groups of banks.
    "Groups of banks by nationality have chosen to take a look
at what other groups of banks in other countries are willing to
do and if let us say British banks wind up giving 99 pct of
what is needed and U.S. Banks give only 92 pct, then the
British banks say as a whole they will pull out," he said.
    "There are banks that have decided that lending is not a
good business any more. They want to deal in securities, they
want to go into investment banking, they want to go into the
turnover business rather than the carry business," Fernandez
said. "We have to thread our way through a constellation of
banks, all of whom have different objectives."
    He said in order to survive, the Philippines would have to
try and stimulate new types of inflows, "whether this be direct
investments, whether this be investments by institutions that
now have chosen not to lend but to invest, or whether this be
debt to equity conversions."
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