Smaller banks remain well-capitalized, says BSP

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) reported yesterday the capital position of the country’s thrift, rural, and cooperative banks remained healthy amid the exit of weak players.

Data showed the capital adequacy ratio (CAR) of thrift banks eased to 21.66 percent as of end March from 22.31 percent in end-December 2014 due to a quarter-on-quarter rise in risk-weighted assets brought about by an increase in exposure to debt securities held-for-trading.

On the other hand, the CAR of rural and cooperative banks inched up to 18.24 percent in end March from 18.17 percent in end December 2014 on the back of the higher quarter-on-quarter increase in their qualifying capital of 1.17 percent compared to the 0.77 percent rise in their risk-weighted assets.

The CAR figures are an indication of the universal and commercial banks’ continued efforts to maintain adequate capital buffer against unexpected losses that may arise during times of stress.

“The BSP monitors the capital position of banks as part of its supervisory efforts to promote adherence to high credit underwriting standards and to enhance the resilience of financial institutions against systemic risks,” the central bank said.

The BSP said thrift, rural, and cooperative banks accounted for 3.7 percent of the banking system’s assets at the end of the first quarter.

The BSP has ordered the closure of 12 banks that were placed under the supervision of the state-run Philippine Deposit Insurance Corp. (PDIC) in the first nine months.

These include the Community Bank (Rural Bank of San Alfonso) Inc., Community Rural Bank of Magsaysay (Davao del Sur) Inc., Rural Bank of Labrador (Pangasinan) Inc., Rural Bank of Magsingal (Ilocos Sur) Inc., Rural Bank of Pres. Roxas (North Cotabato) Inc., Rural Bank of Sta. Magdalena (Sorsogon) Inc., Siargao Bank (A Rural Bank) Inc., Surigaonon Rural Banking Corp., Farmer’s Rural Bank Inc. in Batangas, Xavier-Punla Rural Bank Inc., Rural Bank of Buguias Inc., and Rural Bank of Calasiao Inc.

Last July, the BSP together with PDIC and Land Bank of the Philippines launched the Consolidated Program for Rural Banks (CPRB) to further encourage mergers and consolidations among rural banks.

 CPRB is different from the Strengthening Program for Rural Banks (SPRB) Plus that is aimed to strengthen the banking system and to minimize bank closures.

Last December, the BSP and PDIC approved the extension of the SPRB Plus to end December this year with certain operational refinements after banking industry associations pushed for the program’s extension.

The SPRB Plus is an enhanced version of the original SPRB launched in 2010 exclusively for rural banks.

Early this month, the BSP also revived Strengthening Program for Cooperative Banks (SPCB) Plus for one more year aimed at promoting mergers and consolidations with and acquisition of cooperative banks by “white knights.”

As of end-June, the BSP is supervising 2,013 thrift banks, 503 rural banks and 29 cooperative banks.