BSP to release new rules on banks‘ reporting system

By Donnabelle L. Gatdula
The Philippine Star 08/03/2006

The Bangko Sentral ng Pilipinas (BSP) will release end of this week new rules that would overhaul banks’ reporting system, BSP Deputy Governor Nestor Espenilla said yesterday.

“We are tidying up some of the templates and we will be ready to release it. It was already approved by the Monetary Board for release,” Espenilla said.

After the release, he said banks would have at least one year to prepare and comply with the new system.

“We already gave them ample time to prepare. It’s been two years since the release of the guidelines. And the rules will give them another one year,” Espenilla said when asked if the BSP will give more time for the banks to comply with the new reporting guidelines.

He said proper consultations with affected parties are also conducted. “We have conducted more than a year of consultation with banks,” he said.

Last year, the BSP presented the draft of its New Risk-based Capital Adequacy Framework which lays out the guidelines for the local adoption of Basel 2.

This is a document published by the Basel Committee on Banking Supervision in June 2004 that aims to promote stronger risk management among banks through a three-pronged framework consisting of minimum capital requirements, a supervisory review process and market discipline.

The BSP will require banks to adopt the more simple approaches prescribed in Basel 2 in 2007.

Since the Basel 2 will require strong capital for banks to comply, banks would need to consolidate to be able to conform with the new ruling.

Some banks like BPI have already strengthened its position in the market by acquiring Far East Bank and Prudential Bank. Union Bank has also merged with the International Exchange Bank.

Development Bank of the Philippines and Land Bank of the Philippines have plans to issue more Tier 1 and 2 notes to meet the Basel 2 requirements.