Google

ASEANAFFAIRS
Sign up | Log in

    ASEAN PROFILES

  ASEAN KEY DESTINATIONS

Home  >>   Daily News  >>   Philippines  >>Finance  >> PHL lenders to meet capital needs of banks 'too big to fail' – Fitch
NEW UPDATES Asean Affairs  10 July 2015  

PHL lenders to meet capital needs of banks 'too big to fail' – Fitch

Most big banks in the Philippines are able to meet the new capital requirements for domestic systemically important banks (D-SIB) deemed "too big to fail," debt-watcher Fitch Ratings Inc. said Wednesday.
 
The Bangko Sentral ng Pilipinas (BSP) announced Monday that it has completed identifying D-SIBs "whose distress or disorderly failure would cause significant disruptions to the wider financial system and economy."
 
D-SIBs are required to maintain additional Common Equity Tier 1 equivalent to 1.5 percent to 2.5 percent of their risk-weighted assets on top of the existing 10 percent capital adequacy ratio required by the central bank.
 
"A handful of the largest banks including BDO Unibank, Bank of the Philippine Islands and Metrobank are likely to incur a 2.5 percent additional loss-absorption requirement while other large lenders should fall into the 1.5 percent bucket," Fitch said.
 
The BSP has not publicly disclosed the list that will be updated every year. The central bank will notify D-SIBs individually of their classification.
 
Implementation
 
The central bank BSP will implement the higher capital requirement in phases from January 2017 to January 2019.
 
Parent banks, which tend to have lower capital ratios, would have failed to comply with the higher capital requirement had the central bank imposed the requirement at the end of 2014, Fitch said.
 
But any bank with a shortfall would have to take action to comply with the requirements ahead of the phase-in period, the debt-watcher added.
 
Parent banks could supposedly expand their capital buffers through internal capital generation, which would require a slowdown in credit growth or an increase in earnings retention.  
 
"Our internal simulations affirm that a reasonable earnings retention program would be sufficient to bring the capital level of D-SIBs within the required threshold," BSP Governor Amando Tetangco Jr. said in a separate statement Monday.
 
Alternatively, banks could raise more common equity or streamline subsidiary holdings, according to Fitch.
 
The increase in core capital, however, will add to pressures on profitability as intensified competition arises from foreign banks entering the Philippines, it noted.
 
Supervision
 
Aside from the higher capital requirement, the BSP also set higher supervisory expectations for D-SIBs.
 
For instance, recovery plans in case of breaches in capital requirements must be outlined in their annual documents on Internal Capital Adequacy Assessment Process.
 
"The higher bar for D-SIBs in terms of capital requirement and supervisory expectations serves to strengthen the system by lowering the probability of systemic bank failures," Tetangco said.
 
The D-SIB framework is aligned to the Basel III initiatives, which aim to address the weaknesses of the international banking industry that was revealed during the global financial crisis. – VS, GMA News


Reach Southeast Asia!
10- Nations, 560- Million Consumers
And $1 -Trillion Market
We are the Voice of Southeast Asia Media Kit
The only Media Dedicated to Southeast Asia Advertising Rates for Magazine
Online Ad Rates
Contact: marketing@aseanaffairs.com

Comment on this Article. Send them to  your.views@aseanaffairs.com

Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited
 
or
submit your comment in the box below



 
Today's  Stories                           July  10 , 2015 Subsribe Now !
• VN electronics exports expand Subcribe: Asean Affairs Global Magazine
• New high in Temasek net portfolio
• BI on guard against impact of Chinese crash
Research Reports
on Thailand 2007-2008

• Textiles and Garments Industry
• Coffee industry
• Leather and footwear industry
• Shrimp industry

• PHL lenders to meet capital needs of banks 'too big to fail' – Fitch
• Southern Ca Mau seeks $2.5b seaport
Asean Analysis                   June 26, 2015
• Asean Analysis June 26, 2015
U.S. Companies Engage Myanmar on Reforms, Capacity and Infrastructure
Advertise Your Brand

Asean Stock Watch  July  9,   2015
• Asean Stock Watch-July  9, 2015
The Biweekly Update
• The Biweekly Update June 26, 2015

ASEAN NEWS UPDATES      Updated: 04 January 2011

 • Women Shariah scholars see gender gap closing
• Bank Indonesia may hold key rate as inflation hits 7 percent
• Bursa Malaysia to revamp business rules
• Private property prices hit new high in Singapore • Bangkok moves on mass transport
• Thai retailers are upbeat
• Rice exports likely to decline • Vietnamese PM projects 10-year socioeconomic plan

ASEAN  ANALYSIS

This year in Thailand-what next?


AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More

 


Name

Name


Email

Email



1.  Verifier

1. Verifier

For security purposes, we ask that you enter the security code that is shown in the graphic. Please enter the code exactly as it is shown in the graphic.
Your Code
Enter Code

Home | About Us | Contact Us | Special Feature | Features | News | Magazine | Events | TV | Press Release | Advertise With us

Our Products | Work with us | Terms of Use | Site Map | Privacy Policy | Refund Policy | Shipping/Delivery Policy | DISCLAIMER |

Version 5.0
Copyright © 2007-2015 TIME INTERNATIONAL MANAGEMENT ENTERPRISES CO., LTD. All rights reserved.
Bangkok, Thailand
asean@aseanaffairs.com