Bunag, Sherilyn C.

BSA – A2A

1. In your opinion, what will be the impact of Enhanced Community Quarantine on Investment
banking activities like:  (10 pts.)
a. Loan commitments
b. Investment Securities
c. Working capital
It has been a month since the Enhanced Community Quarantine (ECQ) was
implemented in the entire Luzon area. This has caused implications to several sectors of the
economy, one of which affected several investment banking activities.
One of the banking activities affected is loan commitments. Recent news indicate the
possibility of non-deduction of loan payments to existing bank loans, in months of March, April,
and May, so as to provide the borrowers enough money to sustain their needs during the ECQ.
Nevertheless, this may sound as fruitful as it may seem but the economy suffers the setbacks.
Since loans make up about 64% of bank assets, banks are likely to experience deficiency in
cash thus affecting its normal operations off-balancing the usual amount of assets they have in
order to fully maximize their role in the economy. Likewise for investment securities, there would
certainly be a fewer number of people trading or purchasing investment securities because of
the need to address life essentials. In this sense, only those who have too much excess of cash
or assets could take advantage of the lower prices of stocks and other securities but then, there
would be more relative risk as return cannot be as promising as it used to be and as it is
supposed to be. Furthermore, the working capital of banks would fluctuate as lower liquid assets
are deposited to banks than normal while there would be a relative increase in the withdrawals
implying the possible decrease in the working capital of banks.
With these undeniable and inevitable setbacks brought about by this global crisis to
banking industries and to the economy as a whole, the Enhanced Community Quarantine may
only be temporary but its impact will yield permanent changes to the society and the economy
more than what is expected.

2.  As an Insurance company, what will be a good approach that you can contribute to the
country and your clients, considering the possible economic crisis during and after the ECQ?
Explain clearly. (5 pts.)
We can never be too much or just prepared for something but does not mean that we
would neglect taking necessary measures and making the best preparations we can for the
unexpected. The apparent possible economic crisis as an aftermath of the ECQ made us realize
the worth of being prepared, having savings, and living simply.
As an insurance company, it would be a good approach to help individuals and
businesses secure their lives and their assets through obtaining insurance policies best fit for
their needs and capabilities. In addition to that, most insurance companies nowadays, offer
diverse financial products and serve as asset managers for both individuals and businesses. In
this regard, insurance companies play a vital role in the educating and assisting the market
players not only to secure their lives and their properties but also to earn passive income
through investments.
It is a good opportunity not only for insurance companies, but also, for individuals and
businesses to at least be prepared especially for unforeseen events such as the one we are
currently facing.