BSP issues guidelines on new SBL limit

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) has issued the guidelines on the additional single borrower’s limit (SBL) for exposures of banks to proponents of major infrastructure or development projects, oil companies and trust corporations.

BSP Governor Amando M. Tetangco Jr. said the circular amended the regulations on SBL under the provisions of the Manual of Regulations for Banks and the Manual of Regulations for Non-Bank Financial Institutions.

Tetangco stated in the circular that the total amount of loans, credit accommodations and guarantees may be increased by an additional 10 percent of the net worth of such bank as long as the additional liabilities are adequately secured by trust receipts, shipping documents, warehouse receipts or other similar documents transferring or securing title covering readily marketable, non-perishable goods which must be fully covered by insurance.

He noted that an additional 25 percent SBL for exposures of banks to infrastructure and development projects under the Public-Private Partnership (PPP) program of the Aquino government.

He pointed out that the total exposures of the bank to any borrower pertaining to such PPP infrastructure and development projects should not exceed 25 percent of the net worth of such bank and would only be allowed for a period of three years.

Furthermore, the circular stated that an additional 15 percent SBL granted to finance oil importation of oil companies that are not subsidiaries or affiliates of the lending bank engaged in energy and power generation.

The BSP said the credit risk concentration arising from total exposures to all oil companies should be considered by the bank in its internal assessment of capital adequacy relative to its overall risk profile and operating environment and should be incorporated in the internal capital adequacy assessment process (lCAAP) document.

The BSP used to restrict each bank’s exposure to a single borrower to only 25 percent of its capital.

However, the BSP has decided to ease the requirement to ensure there is adequate supply of oil and petroleum products in the country and at the same time support major infrastructure and development projects under the Aquino administration’s PPP scheme.

The Philippines booked a budget deficit of P310 billion or 3.6 percent of gross domestic product (GDP) last year from P298.5 billion or 3.9 percent of GDP in 2009.

The shortfall, however, was P15 billion better than the programmed budget deficit ceiling of P325 billion or 3.9 percent of GDP.

The Aquino administration intends to trim the budget deficit to two percent of GDP starting 2013 until the end of the chief executive’s term in 2016.