THE Bangko Sentral ng Pilipinas is working on new guidelines to strengthen state-owned banks’ “capacity to serve” government’s financing needs, according to BSP Governor Benjamin E. Diokno.
In a virtual news briefing, Diokno said the enhanced policy will provide for unsecured peso-denominated credit exposures to the National Government (NG) to be excluded from the deductible items for the purposes of computing the minimum required capital.
“The policy enhancement will also enable government banks to free up and reallocate capital to aid priority sectors affected by the Covid-19 pandemic, in support of the NG’s broader economic recovery efforts,” Diokno said.
Government banks’ credit accommodations to the NG are considered directors, officers, stockholders and their related interests (Dosri) transactions.
Under existing BSP regulations, these credit accommodations are ordinarily unsecured and deducted from capital.
The new guidelines will “align” these regulations by clarifying that the exposures to the NG are “non-risk assets” of government banks and should not be charged to their capital.
Diokno said the enhancements are expected to have a positive impact on the adjusted capital and capital adequacy ratio of government banks, even with their current low loan exposure to the NG.
The BSP implements minimum capital ratios of 6 percent Common Equity Tier 1 (CET1) ratio, 7.5 percent Tier 1 ratio and 10 percent Total Capital Adequacy Ratio (CAR).
The BSP’s required minimum capital is more stringent than the 8-percent minimum capital required as a rule of thumb by the Bank of International Settlements.