BAP: Philippines' banking system not exposed to US fallout

MANILA, Philippines — The Bankers Association of the Philippines assured on Tuesday that the country’s banking system is not exposed to the contagion from the collapse of US-based banks.

In a statement, the BAP explained the fallout from the closures of Silicon Valley Bank (SVB) and Signature Bank will not have any “material impact” on Philippine banks.

“Banks have diversified deposit bases that include all sectors of the Philippine economy, allowing them to continuously provide the liquidity needs of their clients,” the statement read.

SVB’s collapse last Friday was precipitated by a bank run, essentially the bank did not have any cash to pay back its depositors. The bank was considered one of the largest lenders to the tech sector. 

Two days later, the ensuing panic forced regulators to shut down Signature Bank to soothe equity markets and investors.

Experts reckoned that SVB was the largest bank to fail ever since the 2008 Global Financial Crisis.

The failure of the two banks sent investors everywhere on edge as the collapse dominated headlines over the weekend.

“Additionally, banks in the Philippines continue to have capital and liquidity ratios that exceed the requirements set by the Bangko Sentral ng Pilipinas,” the BAP added.

Philippines equities reacted to the news glumly. Local shares trended downward at the start of the week.

Much like the BAP, Bangko Sentral ng Pilipinas Governor Felipe Medalla assured the public that Philippine banks are not exposed to the fallout. 

“The prudential measures implemented by the BSP provide the necessary support that allows the Philippine banking system to withstand economic shocks,” BAP said.  — Ramon Royandoyan