BSP wants foreign banks to get more involved in infra and “green” financing
Foreign banks can play a major role in the Philippines’ economic recovery from the coronavirus pandemic by leveraging their resources to finance expensive infrastructure projects and undertaking so-called green finance activities.
At the same time, these international financial institutions can also boost inclusion in the country, with a number of them keen to establish local digital operations, either by acquiring new licenses or by converting their existing traditional banking licenses.
So said Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno, who noted in an online briefing that foreign banks in the Philippines “remain on solid footing amid the health crisis because these financial institutions remain well. capitalized and continue to grow “.
“The BSP recognizes the steady growth of foreign banks and their ability to help drive the country’s recovery,” he said. “Given their expertise in the global market, foreign banks can facilitate the underwriting of green, social or sustainable bonds or finance infrastructure projects in key sectors such as renewable energy and low carbon transport. “
On solid foundations
According to the central bank chief, the capital adequacy ratio of foreign banks stood at 27.5% at the end of March this year, well above the regulator’s threshold and the international standard.
In addition, the assets, loans and deposits of foreign banks at the end of April of this year represented an increase of 32%, 23.4% and 43.4%, respectively, compared to the figures of 2014, the year in which the Republic Law No. 10641 liberalized the entry of foreign banks.
There are now 29 foreign banks operating in the Philippines representing 1.4 trillion pesos in assets equivalent to 7 percent of the Philippine banking system.
Twelve of them are included in the 2020 list of so-called global systemically important banks. By country of origin, most branches and subsidiaries of foreign banks are from Asia, especially Taiwan and South Korea.
Digital banking perspectives
Statistics indicate that there is room for branches and subsidiaries of foreign banks to expand their balance sheets and operations, Diokno said.
He explained that the presence of foreign banks had also enabled the sharing of new technological innovations and the transfer of recognized banking practices, particularly in the areas of corporate governance and risks as well as business processes.
“The BSP is also planning more foreign investment in the country with the implementation of the digital banking framework in December 2020,” added Diokno, noting that the liberalization of the entry of foreign banks had fostered a competitive banking environment. resulting in increased access by the banking public to a wider range of financial products and services at more competitive rates. INQ
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