Philippines central bank to cap lenders’ large exposures

The Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, is finalizing a large exposures framework for banks to ensure the stability of the banking sector as well as the country’s financial system. In a draft circular, the BSP said it is cognizant that risks arising from the exposures of BSP-supervised financial institutions (BSFIs) to a single counterparty or group of connected counterparties could pose concerns to the stability of each bank and to the financial system. Under the proposed rules, an exposure is considered a large exposure if it is equal to or higher than 10% of a bank’s eligible capital. The framework will be applicable to universal and commercial banks as well as their subsidiary lenders and quasi-banks.