Today Friday, 18th June 2021
Finance and Fitness Today

Your latest news, ideas, strategies. Keep up to date with all the latest information.

Heath Tips

  • In enim justo, rhoncus ut, imperdiet a
  • Fringilla vel, aliquet nec, vulputateDonec pede justo,  eget, arcu. In enim justo, rhoncus ut, imperdiet a, venenatis vitae, justo.Nullam dictum felis eu pede mollis pretium.

Recent posts

Too-big-to-fail banks still stable

Too-big-to-fail banks still stable

TOO-BIG-TO-FAIL banks are in a strong position despite the ongoing coronavirus pandemic, supporting the financial system’s overall stability, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said on Thursday.

“D-SIBs (domestic systematically important banks) remain on solid footing amid the heath crisis. We see this contributing to the overall soundness of the domestic financial system and the country’s financial stability,” Mr. Diokno said at an online briefing.

The central bank does not disclose the actual number of lenders that are considered as D-SIBs. However, the central bank chief assured they will “continue to work in further deepening the public’s understanding of the nature of a D-SIB in the BSP’s regulatory framework.”

Central bank data showed the capital adequacy ratio of D-SIBS improved to 15.8% at end-2020 from 15.3% the year prior. This was above the 10% minimum requirement by the central bank and the 8% mandated under the Basel III standard.

Assets and deposits of these too-big-to-fail banks also rose by 6.2% and 8.5%, respectively, as of March.

On the other hand, D-SIBs’ loan portfolio shrank by 3.6% as of March. Their nonperforming loan (NPL) ratio stood at 3.3% while NPL coverage ratio was at 99.4%.

The central bank said it is on the lookout for systemic risks at the micro and macro level that could affect the financial system and, consequently, the economy.

In April, the central bank announced it would require too-big-to-fail banks to submit a separate recovery plan annually starting 2022. The BSP previously only required D-SIBs to submit an Internal Capital Adequacy Assessment Process document, which includes the recovery plan, annually every March 31.

“The issuance aims to tightly embed the recovery planning work in the broader crisis preparedness framework, as the importance of crafting a viable and sound recovery plan has been highlighted in this health crisis,” Mr. Diokno said on Thursday.

Last week, the interagency Financial Stability Coordination Council spearheaded by the BSP said most risks to the financial system have been “under control,” but noted borrowers’ impaired ability to pay their debts due to the crisis is among the top risks that could affect the sector.

Meanwhile, the central bank chief also said they will remain vigilant about the impact of the crisis on the country’s labor conditions, which could affect price stability.

“Changes in the labor market outcomes pose significant implications on wage dynamics, thereby affecting the rise in prices and the ability of the economy to recover from the crisis,” Mr. Diokno said.

He noted that the Philippine Statistics Authority’s (PSA) monthly release of the Labor Force Survey versus the previous quarterly schedule also allows the central bank to better monitor the labor market.

Latest PSA data showed the jobless rate stood at 8.7% in April, inching up from the 7.1% in March but still better than the 17.6% seen in April 2020. Analysts attributed the higher jobless rate to the impact of renewed lockdown restrictions in Metro Manila and nearby provinces.

The April unemployment rate represents 4.138 million unemployed Filipinos, up from the 3.441 million in March albeit lower than the 7.228 million in the same month of 2020.

Mr. Diokno has said the central bank will remain accommodative to support the country’s more “stable” bounce back. He said they will also monitor the labor market to assess the pace of economic recovery. — LWTN

Related Posts

Read also x