By Ma. Isabel Ongpin
THIS may be called by those who did not experience it sour grapes. But if we give them the benefit of the doubt, these sour grapes have been authentically foisted on us.
I speak of the Land Bank of the Philippines (LandBank) and its dubious claims to helping small and medium, even micro businesses, especially those affected by Covid-19. Indeed, its sumptuous website has a specific division called I-Rescue for "Interim Rehabilitation and Support to Cushion Unfavorably Affected Enterprises by the Covid- 19." It is also billed as a government financial institution that strikes a balance in fulfilling its social mandate of promoting countryside development and having the means to do so. Supposedly its profits from commercial banking are used to finance programs and initiatives for farmers, fisherfolk and the micro, small and medium enterprises.
Here is our experience and you be the judge: An affordable medical clinic engaged in health services from maternal and child care, to treating common medical conditions like diabetes, hypertension, respiratory diseases plus vaccinations and corporate health services for more than 20 years now, was negatively affected by the pandemic. The social enterprise which is a foundation is also recognized as a quality partner of the government in reducing unmet needs of family planning and recently making accessible affordable mental health services via mindfulness-based programs. (Disclosure: I am a founding member and current chairperson of this foundation.)
You may consider us a social enterprise engaged in providing social services as we are a nonprofit successfully engaged in the medical field for over two decades now, with clinics in Metro Manila, Rizal and Davao. We were doing well as an independent medical service facility serving lower middle class families who had the ability to pay affordable prices and thus keep government hospitals less crowded.
In the course of recent business, the Cebu clinic had to be temporarily closed because a highway was built near it disrupting walk-in traffic which is what we depend on. The same thing happened with the Lagro clinic which was temporarily disrupted by MRT 7 construction. This latter clinic was in the process of being transferred to a better location. When the pandemic hit we were in the middle of the above positions. We needed to scale down and we did, closing the aforesaid clinics, reducing the workforce, delaying payments to suppliers and even salaries to the top executives within reason. And we needed help, the help that LandBank seemed to promise.
In need of working capital, we approached LandBank. The usual procedural demands were made by the bank — disclosure of financial statements, rationalization of management moves, presentation of audited papers by an established accounting firm and a host of other requirements, all of which were complied with.
We were requesting a P20 million loan, had a collateral (a condominium in Davao City where our clinic is located) independently appraised in 2021 at P33 million, and plans to reopen the Lagro clinic in Novaliches in a few months. We also had to get new equipment, pay our suppliers and get on with putting clinics back in operation. We were also coming close to pre-pandemic financial health in the still operating clinics in Cubao, Masinag and Davao.
LandBank came back with a shocking demand to us, bereft of working capital as we were — a demand for us to produce P3 million for the P20 million loan to be put into the proposed Novaliches Clinic, restrictions on most of the loan itself which affected working capital that would get us nowhere towards a better situation. Meanwhile our P33 million collateral value was diminished by LandBank to a mere P13 million which, whether they admit it or not, affected the loan amount.
Puzzled by the demand for us in our present straits to put in P3 million equity, we asked knowledgeable finance persons who said that was a practice of commercial banks. They want "skin" i.e. for us to put equity in the mix. Except that in our present straitened finances doing so would starve our operating clinics and personnel. It was a no-go for us.
So, we went back and removed the planned expansion to Novaliches and requested a mere P10 million to tide us over as operating clinics were showing much improved results. In answer, LandBank began by second-guessing what we did to stem our problems, questioning why we did not close clinics right away which we could not due to lease arrangements and medical service commitments. LandBank also demanded a 10-year forecast. Upon delivery of the forecast, LandBank summarily turned the loan application down. The reason given was that our pre-2020 results were not good enough to merit such. So, why did they ask for the 10-year forecast if it was to be overruled by the pre-2020 results which was really just a P3 million loss? For a nonprofit with a social mission to offer affordable health care, this is not a terribly hard situation. It was the pandemic that struck that was the immediate cause. Breathtaking and disparaging rejection was the experience.
As rationalized by financial insiders, LandBank was acting like a commercial bank, not a development bank. Nothing wrong with a commercial bank if it bills itself thus. But a social development bank, supposed to uplift those who cannot meet commercial bank demands? It showed that there is no so-called "balancing act" that the LandBank website states between commercial and social development. In our case, we experienced the purely commercial when we are not. And we were affected by the pandemic, not anything else for which their website said it had a mandate to help.
Naturally, we are upset and have the so-called sour grapes reaction from the harsh and hypocritical, even summary and demeaning treatment. We asked for a reason in writing why the compromise loan was turned down with a mere phone call and they sent us a generic letter saying we did not meet their credit parameters. Period.
It is also germane to say here that we had in the past a loan from the Development Bank of the Philippines which we paid back on time at the rate of interest required.
Well, we question those LandBank credit parameters as reflected in their self-praise and self-congratulatory website. Based on their mandate, it is our opinion that LandBank did not meet it. There was another example of a LandBank's dismissal previously which should have given us an omen or portent of things to come. When the country's most modern rice mill and rice-producing entity went to LandBank for a loan to start it, they were turned down because LandBank insisted they be located in Luzon and not a poor rural area in Leyte as they planned. Pluckily, this entity went to Leyte without LandBank and has just been named the third best rice quality producer in the world, its rice mill in Leyte is state-of-the-art, and its farmer partners have raised their incomes, no thanks to LandBank.
LandBank is a commercial bank with perhaps token loans to a fisher or farmer here and there. Or, a politician's favorite project (from recent photos in the papers with a political heavyweight). But its major and crucial loan portfolio is not in these areas but in commercial enterprises. One finance person suggested that we dare LandBank to reveal its top 10 borrowers which of course they won't because it is pretty clear they will be the top corporations of this country. They carry the current mistake of government agencies meant to serve the public by prioritizing the profit motive at the expense of public service.
Sorry to be harsh but we were treated harshly despite our social services, our work towards nation-building and helping the government deliver social services. It was a total waste of time with disparagement and dismissiveness to boot.
LandBank's mandate and how it is delivered cries for a management audit. Particularly its credit committee which seems to be in a pawnshop mode (diminishing collateral by 40 percent is a pawnshop maneuver). Only, pawn shops truthfully say what they are, LandBank does not. If LandBank cannot change which seems to be the case, they should be privatized and be the commercial bank that they have been in disguise for these many years. Taxpayers will be better served and so will the public by not raising their hopes only to disappoint. Au revoir, Land Bank, hope never to meet you again in your present form.