BDP asked for a solid reason to extend regulatory leniency from BSP
The Development Bank of the Philippines (DBP) has requested an extension of its regulatory relief from the Bangko Sentral ng Pilipinas (BSP). This move aims to maintain a more durable regulatory framework that preserves the real value of certain regulatory thresholds, which likely include capital, asset, or operational requirements.
The BSP will assess the DBP's request, considering several factors to determine if an extension is warranted. These factors include the bank's economic and financial conditions, financial health and risk management, precedents and policy objectives, alignment with broader macroeconomic and financial stability goals, and the legal and regulatory frameworks.
The DBP's financial health will be closely examined, with the central bank reviewing the bank's capital adequacy, asset quality, governance, and overall compliance with prudential standards to justify regulatory relief. The BSP will also assess the ongoing risks and stability in the financial system and evaluate whether the extension would help strengthen or undermine that stability.
The DBP reported a net income of P7.1 billion in 2024, with its net loans and receivables standing at P504.4 billion as of end-December, a 4.3% increase from the previous quarter. Despite this, the bank admitted in 2023 that its Capital Adequacy Ratio (CAR) may drop below the minimum requirements after it injected P25 billion in capital to the Maharlika Investment Fund. As of end-November 2023, the DBP's CAR was 14.78%, above the regulatory requirement of 10%.
The BSP's deputy governor for financial supervision, Chuchi Fonacier, stated that the central bank wants the DBP and Landbank to exit regulatory relief after they injected a combined P75 billion in seed money for the Maharlika Investment Fund. Landbank, however, has decided to no longer seek regulatory relief, as its financials are already sound.
Fonacier emphasized the need to avoid moral hazard by ensuring banks are not less compelled to mitigate financial risks due to regulatory relief. She also mentioned that other factors beyond a bank's control could justify an extension of regulatory relief. Fonacier's statement was made in a mix of English and Filipino.
The BSP's decision will weigh the bank's health, systemic impact, and alignment with national financial policies and regulations. There is no direct detailed statement in the search results about DBP’s specific reasons or BSP’s exact criteria, so this answer synthesizes relevant regulatory context and common central bank considerations from the provided sources.
The Development Bank of the Philippines (DBP) seeks an extension of its regulatory relief to maintain a more robust regulatory framework for its capital, asset, or operational requirements. The BSP's assessment of the DBP's request will consider factors such as the bank's economic and financial conditions, financial health and risk management, alignment with broader macroeconomic and financial stability goals, and ongoing risks in the financial system.
