Connect with us

Hi, what are you looking for?

Economy

BSP adopts new bank rating system

THE Bangko Sentral ng Pilipinas (BSP) started implementing this month a new compliance rating system for banks called the Supervisory Assessment Framework (SAFr), which it hopes will ensure stability in a post-pandemic environment.

BSP Governor Benjamin E. Diokno said SAFr replaced the CAMELS (Capital Adequacy, Asset Quality, Management, Earnings, Liquidity, and Sensitivity) framework, effective Jan. 1.

The SAFr is a single integrated risk-based assessment framework, which covers all BSP-supervised financial institutions (BSFI). It links the systemic importance and risk profile of a BSFI to the formulation of supervisory plans for each institution.

The implementation of SAFr was originally scheduled for July 2020, but was delayed to give banks more time to prepare amid the pandemic.

“Prior to the adoption of the SAFr, only universal and commercial banks undergo assessments for Domestic Systemically Important Banks. Under SAFr, impact assessment considers all BSP-supervised institutions,” Mr. Diokno said in a briefing on Thursday.

SAFr assessments will be conducted at least every semester for universal and commercial banks, and annually for thrift and rural banks. The supervisory rating was assigned annually in CAMELS, regardless of the lender’s classification.

The BSFI will be assessed in terms of its impact on the financial system in case of a failure; its risk profile as identified by significant activities; and its supervisory intensity or the attention required and appropriate for the lender considering its impact and risk profile.

Under the new system, assessments may also be done anytime, in case of significant developments that change a lender’s risk profile.

Mr. Diokno said the SAFr will be instrumental in ensuring and enhancing stability in the banking industry under the “New Economy.”

“We say this because the use of off-site tools and thematic reviews, as well as the emphasis on continuous surveillance, would support more robust and dynamic assessments,” the BSP chief said.

“More frequent engagements with the supervisor can be expected for larger, riskier, and more complex BSP-supervised institutions,” he added.

In terms of rating scale, SAFr will only have a four-point system that clearly delineates between satisfactory and unsatisfactory ratings. This is unlike CAMELS which employed a five-point scale that had a tendency to lean on a “middle-of-the-road assessment,” he added.

“The adoption of the SAFr is among the reforms introduced by the BSP in response to the changes in the operating landscape brought about by financial innovation, deregulation, competition, and advancements in information technology,” Mr. Diokno said.

The BSP maintains that the local banking industry remains on solid footing and well-capitalized, despite the impact of the pandemic.

In a separate briefing on Thursday, Mr. Diokno said that the capital adequacy ratio of universal and commercial banks stood at 16.3% on a solo basis and at 16.7% on a consolidated basis as of end-June 2020. Both are well above the 10% requirement by the BSP as well as the 8% set by Basel III regulations. — Luz Wendy T. Noble

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us and our affiliates. Remember that you can opt-out any time, we hate spam too!

Latest

Top News

Intensifying focus on worker safety across medical, chemical, automotive, and oil & gas sectors is a major reason for the burgeoning nitrile gloves industry,...

Economy

The government expects to finish 29 flagship infrastructure projects worth P238.48 billion before President Rodrigo R. Duterte’s term ends in 2022. It has added...

Economy

The Philippine central bank raised its balance of payment (BoP) projection for this year on expectations of an improved economic landscape here and overseas....

Economy

The Philippine central bank raised P100 billion from its auction of short-term securities on Friday even as rates rose on hints by the US...

Economy

The country’s outstanding foreign debt fell by 1.5% or $1.4 billion to $97 billion at the end of March from end-December, after the National...

Economy

The Department of Health (DoH) reported 6,833 coronavirus infections on Friday, bringing the total to 1.35 million. The death toll rose by 110 to...

You May Also Like

Investing

Having a good Instagram marketing agency to back up your Instagram account is an absolute must going into the new year. With competition stronger...

Investing

As a traditionally rigid insurance industry becomes bogged down by antiquated processes and operations, a handful of industry leaders are seeking to shake things...

Economy

US President Joseph R. Biden, Jr., will rely on ally countries to supply the bulk of the metals needed to build electric vehicles and focus on...

Economy

THE Securities and Exchange Commission (SEC) has warned the public from investing or to stop any investment in a group named Maxxprofit Computer Trading...

Disclaimer: SmartRetirementReport.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2021 SmartRetirementReport. All Rights Reserved.

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.



Your information is secure and your privacy is protected. By opting in you agree to receive emails from us and our affiliates. Remember that you can opt-out any time, we hate spam too!