BSP eases liquidity rules for big banks
The Bangko Sentral ng Pilipinas ( BSP) has eased the liquidity rules for big banks ahead of the implementation of liquidity coverage (LCR) to make sure these institutions have the necessary assets on hand to ride out short-term liquidity disruptions. The central bank’s Monetary Board has decided to set aside pre- vious liquidity-related guidelines without compromising the prudential policy intent in view of the adoption of the LCR in January next year.
Under the previous guidelines, the BSP required universal and commercial banks to maintain liquid assets equivalent to at least half of government deposits and liabilities.
Big banks were also mandated to maintain foreign currency
denominated liquid assets equivalent to at least 30 percent of foreign currency deposit unit (FCDU) liabilities.
The central bank also required big banks to maintain foreign currency denominated assets equivalent to 70 percent of FCDU liabilities in the same currency as the liability.
“With the forthcoming formal adoption of the LCR by 2018, these guidelines could be lifted. The LCR data is expected to provide regulators and the banks themselves a better gauge of the liquidity standing of covered institutions,” it said.
The central bank said the adoption of the LCR framework is in line with initiatives to promote high standards of risk management in the banking system and to foster financial stability.