DBP seeks extension of BSP regulatory relief

MANILA, Philippines — The Development Bank of the Philippines will seek an extension of regulatory relief from the Bangko Sentral ng Pilipinas (BSP) after contributing P25 billion to the Maharlika Investment Fund (MIF).

DBP president Michael de Jesus confirmed the move, emphasizing the importance of maintaining flexibility despite the bank meeting its required capital ratios.

“We will seek regulatory relief for comfort. Even though we meet all the capital ratios, it’s always good to have that assurance,” he told reporters on the sidelines of the annual reception for the banking community last Friday.

The relief measure, which includes adjustments to capital adequacy ratios (CAR), are typically renewed annually, with some spanning multiple years.

“Some ratios are for four years, some are every year. We’ll be asking for relief for the annual ones this year,” De Jesus said.

Meanwhile, Land Bank of the Philippines has expressed confidence in its financial strength, indicating no current need for regulatory relief.

Landbank president and CEO Lynette Ortiz said the bank’s robust financials have allowed it to maintain its CAR and common equity tier 1 (CET1) despite substantial contributions to national initiatives and government obligations.

“We’ve had discussions before and the regulatory relief was actually good for two or three years, primarily as a buffer. But if you look at our financials, we have no need for it. We have no need for that,” she said.

Ortiz said even with P32 billion in dividends remitted to the government last year and the P50 billion contribution to the MIF, the state-run bank managed to maintain strong financial ratios.

In September 2023, the two banks remitted its contributions to the MIC, which had an authorized capital stock of P500 billion. Under the law, Landbank and the national government were mandated to initially contribute P50 billion each and DBP with P25 billion.

The BSP previously said the significant capital contributions made by Landbank and DBP, totaling P75 billion, had strained their liquidity positions, which might make them non-compliant with regulatory capital requirements.

To further enhance the financial resilience of LandBank and DBP, the Department of Finance is advocating for amendments to their respective charters.

Among the proposed reforms is enabling the banks to access private capital by offering a portion of their shares to the public.