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Philippines: BSP assures Marcos of PH banks’ stability
THE Bangko Sentral ng Pilipinas (BSP) on Monday reiterated the stability of the Philippine banking system following the collapse of two US banks.
Local banks are “strong and prepared to withstand possible shocks” and also have asset bases significantly different from those of US banks, the BSP said in notes sent to President Ferdinand Marcos Jr.
Philippine banks, in particular, were said to:
• mostly hold loans that are less susceptible to changes in fair value;
• have lower market risk exposure compared to US banks;
• maintain a diversified lending base and manageable loan quality;
• have strong risk governance and risk management systems;
• be highly liquid and tend to rely on a wide depositor base; and
• not have material exposure to the failed banks.
Specifically, the BSP said that Philippine bank losses due to rising interest rates were expected to be smaller compared to their US counterparts. The successive collapses of Silicon Valley Bank and Signature Bank have been attributed to their extensive holdings of low-interest securities.
While the local banking sector remains strong, the BSP said it would continue to closely monitor developments, assess their impact, and act accordingly.
It noted that monetary authorities had been implementing structural reforms including:
• sound governance and risk management standards;
• prudential limits and requirements, including Basel III reforms on capital and liquidity; and
• strengthened surveillance mechanisms and coordination efforts.
Emergency loan facilities that can be tapped by solvent banks experiencing liquidity problems are also in place, the BSP said.
Changes to the charter of the Philippine Deposit Insurance Corp., it added, had provided the central bank with “enhanced resolution authority.”
Source: https://www.manilatimes.net/2023/03/21/business/top-business/bsp-assures-marcos-of-ph-banks-stability/1883597