BSP extends regulatory relief to foreign banks for breach in single borrower’s cap

The Monetary Board approved the grant of regulatory relief to branches of foreign banks which were established in the Philippines prior to the effectivity of Republic Act (R.A.) No. 10641 in the form of non-imposition of sanctions prescribed under existing regulations for breach in the Single Borrower’s Limit (SBL) until 31 December 2021.

 

“Consistent with the other regulatory reliefs or initiatives earlier implemented by the Bangko Sentral ng Pilipinas (BSP), this measure is expected to help boost lending in support of businesses and sectors, and pump prime the country’s economic growth and post-pandemic recovery.

 

Additionally, this will diversify credit exposures, particularly in financing big ticket projects, that otherwise will be concentrated to domestic banks,” BSP Governor Benjamin E. Diokno said.

The regulatory relief was extended in view of the lapse of the transitory period for the SBL computation on 31 December 2020 implementing R.A. No. 10641.

As a control measure, new loans, credit accommodations or guarantees extended and existing credit exposures which are restructured, renewed, and refinanced, beginning 01 January 2021 until 31 December 2021, shall not exceed the prescribed percentage limit using as reference point twice the level of capital or net worth of a foreign bank branch.

The total amount of loans, credit accommodations and guarantees that may be extended by a bank to any borrower shall be subject to a cap of 25-percent of the net worth of such bank.

The percentage limit has been temporarily increased from 25-percent to 30-percent until 31 March 2021 as part of the operational relief measures granted by the BSP to its supervised financial institutions.

There are 14 branches of foreign banks that are operating prior to R.A. No. 10641.