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Philippine c.bank says local banking system is strong
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"Very little" contagion on Philippine side - finmin
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Philippine c.bank to hold policy meeting on Thursday
(Recasts with c.bank comments, including measures taken to
strengthen local banking system)
By Neil Jerome Morales
MANILA, March 20 (Reuters) - Philippine financial
authorities expressed optimism on Monday that a deepening crisis
in the global banking sector does not pose a significant risk
for the local industry and the domestic economy as a whole.
Global financial markets are reeling from a string of bank
failures and fears of contagion, with a deal to rescue Credit
Suisse and promises of liquidity from central banks doing little
to stem fears of a wider crisis in the financial system.
"It does not look like other Global Systemically Important
Banks have the same problem, in which case the impact on the
global economy, and therefore the Philippines, will not be
significant," Bangko Sentral ng Pilipinas (BSP) Governor Felipe
Medalla said.
In notes prepared for President Ferdinand Marcos Jr. on the
stability of the local banking system following the collapse of
Silicon Valley Bank and Signature Bank in the United States, the
BSP said the local banking system remains strong.
The sector is also ready to withstand possible shocks posed
by the collapse of some U.S. banks, the BSP said, though it
added it would continue to closely monitor developments, assess
their impact on the banking system and respond accordingly.
"The BSP has long implemented structural reforms to ensure
the safety and soundness of banks," it said.
The BSP has also imposed prudent limits and requirements,
including the Basel III reforms on capital and liquidity
standards which enable banks to maintain adequate capital and
liquidity, as well as strengthened surveillance mechanisms for
risk monitoring, it said.
To address any serious liquidity conditions, the BSP said
solvent banks can tap emergency loan facilities.
"There's very little contagion on the Philippine side and in
fact it can be a positive in the sense that central banks are
likely to ease on hiking of interest rates," Finance Secretary
Benjamin Diokno said separately.
In remarks made at a forum organised by foreign journalists,
Diokno said the BSP could decide to opt for a narrower 25 basis
points interest rate hike or keep policy settings unchanged at
its meeting on Thursday, amid global uncertainty.
"The option now is not to hike or to hike by 25 basis
points," said Diokno, though he added he is just one of the
seven-person policy-making monetary board and that he could be
outvoted.
(Reporting by Neil Jerome Morales
Editing by Ed Davies, Kanupriya Kapoor)
