Foreign bankers in the Philippines must be losing their minds just about now. This is because the Philippine Government has just declared tomorrow, 24 February 2023, a non-working holiday, and, by definition, a non-banking day. This means they have to recalculate periods for payments, interest, and similar matters. If there were loan payments due tomorrow, then the borrowers get until Monday to pay instead.
This is maddening for foreign bankers. I remember several documentation meetings where they were practically requiring that banking days be determined on banking days in New York or London, where things are more fixed or predictable rather than in the Philippines precisely because of these surprise announcements.
At some point I expect them to require an extra provision in loan documents that state that when defining what are banking days, the exception for holidays shall only be based on the holidays declared by the Philippine Government prior to the start of any new year. This is to peg what are holidays, and prevent something like this late announcement from wrecking havoc on their schedules.
Actually, I haven’t been part of a loan documentation meeting for some time, and they may already be requiring such a provision but I’m sure borrowers will object because it is obviously advantageous for them. I guess it’s just one of those things foreign bankers have to get used to, if they haven’t already, and shake their heads in disbelief.
For Filipinos, of course, it will be very much welcome. Happy weekend!