BSP to finalize new rules on bank capitalization

MANILA, Philippines - The Bangko Sentral ng Pilipinas expects to finalize an overhaul of bank capital requirements within the year to allow the banking sector to experience more robust growth as well as raise systemic stability in the long-term, its top official said.

Central Bank governor Amado Tetangco Jr. said local banks will need to increase their minimum capital under a new rule that will be issued by the agency before the end of the year.

“Higher capital would serve to make our financial institutions more resilient and stable. This would help individual institutions as well as the financial system as a whole,” he said.

Tetangco declined to say by how much the capitalization would be increased but expressed confidence that the local banks would be able to meet higher capital requirements.

“There’s no final number yet. That’s is being discussed right now so it may not be the proper time to cite a specific number. But the idea is to raise it because the existing capital requirement was set way back in the 1990s,” Tetangco said.

Based on information culled from local banks, stockbrokerage firm Maybank ATR Kim Eng said  the minimum capitalization for lenders could increase by four-fold.

For universal banks, the minimum capital may be raised to P20 billion from P4.95 billion while commercial banks may be required to keep a capital of P10 billion from the current level of P2.4 billion, Maybank ATR Kim Eng said in a research note.

As for thrift banks, whose capital requirements depend on the location of their head offices, the minimum capital may be set at P2 billion.

At present, thrift banks in Metro Manila are required to have a minimum capital requirement of P325 million, while those in other areas have P52 million.

Maybank ATR-Kim Eng noted that of the 21 universal and 15 commercial banks, three non-listed lenders might need to jack up capital to comply with the new measure.