THE Bangko Sentral ng Pilipinas (BSP) is crafting new guidelines on the adequacy of banks’ capital to equate or custom-fit this measure to the size of their operations and the level of risks they typically tolerate.

The proposed guidelines fine-tunes existing guidelines mandating banks to maintain a minimum capital-adequacy ratio, or CAR, of 10 percent, and that those below it must recapitalize.

CAR is a measure of a bank’s ability to sustain banking operations and its attendant risks without the lender falling over, and set at only 8 percent by the Bank for International Settlements.

Deputy BSP Governor Nestor Espenilla Jr. told reporters they are already in dialogue with the banks on how the industry would be assessed and evaluated to arrive at the optimum CAR that banks must meet.

The fine-tuning recognizes that while the CAR, industry-wide, is 14.71 percent on average, it does not adequately reflect the adequacy of capital befitting at the individual level.

Because some lenders are better risk managers than others, for example, they may be allowed to have a lower ratio, Espenilla said.

“Some banks might actually require a CAR level below the 10-percent benchmark while others might require more than 10 percent,” Espenilla said.

“Banks cannot just work to meet the 10-percent minimum requirement for the sake of complying with it,” he said.

The capital-adequacy level of a bank has to depend on its operations and the overall conditions.

This shows that regulators only want to make sure that banks have enough capital to support their specific activities in the financial system.

“We have to be able to determine and monitor that level,” Espenilla said.

AN OFFICIAL of the Millennium Challenge Corp. (MCC) of the United States said the Philippines is now qualified to share in the $2.25-billion grant intended for eight countries to reduce poverty.

STATE-OWNED Land Bank of the Philippines is raising its P12-billion farm-credit facility by P3 billion to P15 billion in support of growing nonrice crops, a bank official said.

THE European Commission  (EC) and International Organization for Migration (IOM) are jointly funding a project to map out the remittance areas between Europe and Asia, especially focused on the way Filipinos and Indonesians send money back home.

THE Bangko Sentral ng Pilipinas (BSP) is crafting new guidelines on the adequacy of banks’ capital to equate or custom-fit this measure to the size of their operations and the level of risks they typically tolerate.