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Philippines: Banks adequately capitalized vs virus scare — BSP
MANILA, Philippines — The country’s banking industry is adequately capitalized to survive potentially crippling impact of certain events such as the rapid spread of the novel coronavirus disease 2019 or COVID-19, according to the Bangko Sentral ng Pilipinas.
BSP Governor Benjamin Diokno said the capital adequacy ratio (CAR) of local banks are much higher than the 10 percent prescribed by the BSP and eight percent threshold set by the Bank of International Settlements (BIS).
“The fear that Philippine banks will experience bad loans and slower credit growth on account of Covid-19 outbreak is unfounded. The fact is that Philippine banks are adequately capitalized,” Diokno said.
S&P Global Ratings lowered the country’s credit growth forecast to eight to 10 percent from the original target of 10 to 12 percent for this year.
Diokno said the central bank is ready to extend assistance to the banking sector to help ward off the impact of the COVID-19 and African swine fever (ASF) outbreak.
“But in recognition of potentially crippling impact of certain events like COVID-19, ASF and other unforeseen calamities, BSP has made available a grant of regulatory relief to some concerned banks and quasi-banks,” Diokno said.
The BSP chief said out temporary regulatory relief measures include among others staggered booking of allowance for credit losses, non-imposition of penalties on legal reserve deficiencies, and non-recognition of certain defaulted accounts as past due.
Last Feb. 25, the BSP announced it was extending regulatory relief to banks that have sustained losses due to exposures to borrowers, industries and sectors severely affected by COVID-19 and ASF outbreak.
In October 2018, the central bank institutionalized the grant of regulatory relief to banks and quasi bank impacted by calamities through Circular 1071.
While the circular is aimed at providing a framework to systematically grant relief to banks affected by calamities and to support their recovery efforts, its coverage may be extended to the COVID-19 and ASF events even without a declaration of a state of calamity in specific areas of the country.
Source: https://www.philstar.com/business/2020/03/10/1999473/banks-adequately-capitalized-vs-virus-scare-bsp