PH banking system remains strong, says central bank

MANILA, Philippines—The Bangko Sentral ng Pilipinas said Friday the country’s banking system remains strong and well-capitalized.

In a statement, the BSP said the closure of Export and Industry Bank was an exception rather than the rule. It said Export and Industry Bank’s assets accounted for just 0.3 percent of total assets of the banking system.

The BSP said the average capital adequacy ratio (CAR) of banks in the country stood at 16.44 percent as of end-September 2011, higher than the BSP’s minimum requirement of 10 percent.

CAR, a closely watched indicator for health of banks, is the ratio of capital of a bank to its risk-exposed assets. Sufficiency of capital means a bank has enough resources to draw from in case it suffers losses, such as from loan defaults.

“The capital adequacy ratio of the banking system remains healthy,” the BSP said.

The BSP said the average CAR in the Philippines is double that required based on international standards.

Under the Basel III Accord, which provides guidelines for bank regulation, CAR must be at least 8 percent to be comfortable.