Despite contributing P50 billion to the Maharlika Investment Corp., LandBank assures its capital adequacy remains stable.
The state-run Land Bank of the Philippines (LandBank) maintains its capital is stable after contributing P50 billion to bolster the Maharlika Investment Corp. (MIC), seemingly in response to an International Monetary Fund ( IMF ) report suggesting capital restoration for the bank following the substantial contribution.
In a statement on Friday, LandBank declared it has 'consistently met and exceeded' the Bangko Sentral ng Pilipinas' (BSP) minimum capital adequacy ratio (CAR) requirement of 10 percent, a key indicator of a financial institution's ability to manage risks, despite its large share in the country's newly established sovereign wealth fund. Earlier, the IMF, in its 2024 Article IV Consultation and Staff Report, stated there is an urgent need for capital restoration plans for both LandBank and the Development Bank of the Philippines (DBP), following their releases of P50 billion and P25 billion, respectively, to the MIC's startup capital. LandBank President Ma. Lynette Ortiz and DBP President Michael de Jesus were both given seats on the nine-member MIC board. The IMF cautioned against potential risks to the financial system if capital restoration plans are not promptly enacted and regulatory relief measures are not phased out swiftly. A capital restoration plan is undertaken for a bank to return its permanent and total capital to levels comfortable enough to fulfill its risk-based and minimum capital requirements within a reasonable period of time. As of Nov. 30, LandBank reported a CAR of 16.42 percent. Its P50-billion allocation to the MIC in September 2023 slightly reduced the CAR to 16.20 percent. However, the figure remains well above regulatory thresholds, LandBank said, emphasizing its ability to balance its development mandate with financial stability. It further clarified that regulatory relief was sought from the BSP as a 'proactive measure to maintain resilience.
Landbank Maharlika Investment Corp. IMF Capital Adequacy Financial Stability
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