DBP, Landbank may still need regulatory relief
MANILA, Philippines — Development Bank of the Philippines and Land Bank of the Philippines could “possibly” ask for an “extension” of regulatory relief extended to them following their hefty investments in the Maharlika Investment Fund (MIF), Finance Secretary Ralph Recto said.
Speaking to reporters on the sidelines of the induction ceremony for new officers of the Economic Journalists Association of the Philippines last week, Recto said a possible extension of relief measures would be a “nonissue” because the government stands ready to support the two lenders.
Recto was responding to questions on whether the two banks would still request for a reprieve from the Bangko Sentral ng Pilipinas (BSP).
“I think the relief is only good for one year … To me, it’s a nonissue because they are government guaranteed,” Recto said.
DBP and Landbank last year sought for a temporary reprieve from the minimum capital requirements set by the BSP after contributing a combined P75 billion to the startup capital of Maharlika Investments Corp. (MIC), the company managing the Philippines’ sovereign wealth fund.
READ: Release state banks’ share in MIF gradually —analyst
Broken down, Landbank remitted to the Treasury its P50-billion investment in the MIF while DBP turned in P25 billion.
The BSP earlier said the mammoth infusions reduced the banks’ liquidity, which might make them noncompliant with the capital requirements set by regulators.
Balance sheets seen to stay healthy
It was not clear if the BSP approved the request from the two banks. Based on BSP regulations, all investments of banks, be it in allied or non-allied undertakings, will be fully charged against a bank’s capital.
READ: Fitch: Landbank, DBP to face credit woes sans relief
Without the relief, global debt watcher Fitch Ratings said the liquidity problems could hurt the credit strength of the two lenders and make it difficult for them to perform their mandate of spurring countryside development.
Landbank and DBP currently hold a “BBB” credit rating from Fitch, matching the investment grade rating of the Philippine government.
That the government stands ready to support both banks means the balance sheets of DBP and Landbank are expected to stay healthy despite their investments in the MIC, Recto said.
“The books of Landbank and DBP are okay,” the finance chief said. “I’m not fearful [for] Landbank and DBP.”
Last month, Recto said the government is “exploring” amendments to the charters of Landbank and DBP, including their possible public listing “to broaden the local capital market.” INQ
