BSP set to issue Basel III guidelines for Philippine banks

Monetary Authorities are set to issue guidelines that will, in effect, strengthen local universal and commercial banks by raising their capital adequacy standards and requirements, in line with the Basel III accord.

Nestor A. Espenilla Jr., Bangko Sentral ng Pilipinas deputy governor, yesterday said in a briefing that more stringent rules following the Basel III would help fast-track reforms of the Philippine banking system, making it more resilient.

“While the Philippines was not affected by the global financial crisis, we want the banking system to stay resilient,” Espenilla said.

With the guidelines in place, the Philippines will join the ranks of China, Australia, Hong Kong and Singapore, where authorities have also implemented Basel III.

According to the BSP, Basel III introduces a package of reforms designed to improve the ability of a bank to absorb losses, and strengthen its firewalls in times of stress.

While countries that adopt Basel III are given until 2018 to implement the accord on a staggered basis, the BSP wants to fully implement the capitalization requirements by January 2014. This means that in two years, the BSP’s capital adequacy standards will be higher than the international standard.