Economy 1 MIN READ

Philippines central bank says local banking system ‘strong’, prepared against shocks

March 20, 2023By Reuters

The Philippine central bank said on Monday the local banking system remains strong and the sector is ready to withstand possible shocks posed by the collapse of some banks in the United States.

The Bangko Sentral ng Pilipinas (BSP) also said it will continue to closely monitor developments, assess their impact on the banking system and respond accordingly.

In notes prepared for President Ferdinand Marcos Jr. on the stability of the banking system following the collapse of Silicon Valley Bank and Signature Bank (SVB) in the United States, the BSP said local lenders have an asset base that significantly differs from that of US banks.

Philippine banks, it also said, “mostly hold loans which are less susceptible to changes in fair value whereas security holdings of SVB (were) larger in relation to their capital”.

Local banks also have lower market risk exposure compared to US banks, and have strong risk governance and risk management systems, according to the BSP notes, which BSP Governor Felipe Medalla shared with media.

(Reporting by Neil Jerome Morales; Editing by Martin Petty)

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