Philippine banks well-placed to meet higher capital requirement — Fitch

MANILA, Philippines — Fitch Ratings said Philippine banks are well-placed to meet the minimum leverage standards set by the Bangko Sentral ng Pilipinas (BSP) over the next two years

In a special report titled “Peer Review: Philippine privately owned banks,” the debt watcher said banks operating in the Philippines have been raising fresh capital through stock rights offering since last year.

Fitch said the rated banks including BDO Unibank, Metropolitan Bank & Trust Co., Ayala-led Bank of the Philippine Islands, Philippine National Bank, China Banking Corp. and Rizal Commercial Banking Corp. are adequately placed to meet liquidity coverage ratio (LCR) rules being phased in over 2018-2019.

“We expect the banks to continue to maintain reasonable buffers above minimum requirements, which should provide adequate loss-absorption to weather fairly significant credit shocks,” Fitch said.

Early this year, the BSP said it would implement the five-percent minimum leverage ratio covering big banks by July. The requirement would check excessive accumulation of assets in the banking system by comparing a bank’s high quality common equity tier-1 capital to its total loan exposures.

The five percent standard is higher than the three percent minimum set under the international Basel 3 framework.