Government-owned banks will have more capital and funding for development financing after the BSP amended the computation of their minimum required capital and risk-based capital adequacy ratio.
Government-owned banks will have more capital and funding for development financing after the Bangko Sentral ng Pilipinas amended the computation of their minimum required capital and risk-based capital adequacy ratio.
During a virtual press briefing on Wednesday, the BSP chief explained that the enhanced circular provides for unsecured peso-denominated credit exposures to the NG to be excluded from the deductible items for purposes of computing the minimum required capital and the Common Equity Tier 1 capital — or owners’ equity and retained earnings — in deriving the risk-based capital adequacy ratio of a government bank.
He said that for government banks, their credit accommodations to the NG are considered as directors, officers, stockholders, and their related interests transactions. These credit accommodations are unsecured and deducted from capital. “Note that government-owned or –controlled banks, or government banks, are wholly or partly-owned by the NG. Hence, credit accommodations of these banks to the NG through national government agencies, are considered DOSRI transactions and fall under deductions for purposes of capital computations,” said Diokno.
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