Bank may have to raise their capital anew this year under a new bank capitalization schedule endorsed for approval by the Bangko Sentral ng Pilipinas (BSP) to the Monetary Board and released as early as next month, a central bank official said.
At the sidelines of the Philippine mid-year economic briefing, BSP Deputy Governor for the Supervision and Examination Sector Nestor Espenilla Jr. confirmed a report from a regional bank that the monetary authorities are scaling up the banks’ minimum capital requirements.
As to the timeline, Espenilla only said they will issue the new rules “soon.” Prodded further on the likelihood of approval of the mandate as early as October this year, Espenilla said: “Yes, that is the working target.”
In September Maybank reported that the central bank wanted a quadrupling of the minimum capital for banks to P20 billion.
“It is always better to be prepared. What we are saying is that the economy has grown continuously and it is time to set the bar higher for market players,” Espenilla told reporters.
He further said while the BSP may have set the bar higher for banks in terms of minimum capital, the lenders should not aim only for the minimum required.
“They should come up with capital that is necessary for their business,” Espenilla said.
The central bank official said there are several ways for banks in the country to observe the spirit of the new reform agenda.
These options include consolidation, soliciting more money from shareholders or engage in strategic partnerships.
On whether the lenders will balk at the series of reforms adopted thus far, Espenilla said the BSP is only taking advantage of the strength of the industry to implement changes seen shielding the sector from more stressful times down the line.
“Why are we doing a lot of reforms? Because these are needed and because we can. We don’t want to do it when the economy is under stress,” Espenilla said.