December 27, 2024 | 6:00pm
MANILA, Philippines — Following the International Monetary Fund’s (IMF) recommendation for capital restoration, Landbank assured the public of its financial strength.
The IMF advised the Bangko Sentral ng Pilipinas to restore the capital of Landbank and the Development Bank of the Philippines after its contributions to the startup capital of the Maharlika Investment Corp.
“Landbank reaffirms its financial strength and stability, following the Bank’s P50-billion contribution to the Maharlika Investment Fund, and remains fully committed to its mandate as a reliable partner to the national government’s inclusive development agenda,” the state-run bank said in a statement.
Landbank said it continues to meet the BSP’s minimum requirements for the capital adequacy ratio, or CAR—a measure of a bank’s ability to meet financial obligations. As of November, Landbank’s CAR stands at 16.42%, which exceeds regulatory thresholds.
The bank also said its CAR remained robust even after its P50-billion contribution to Maharlika.
“Following the P50-billion seed capital allocation to the [Maharlika Investment Corp.] in September 2023, Landbank’s CAR stood at 16.20%, remaining comfortably above regulatory requirements and reflecting the Bank’s commitment to financial stability,” it added.
The IMF had explained that capital restoration is essential for maintaining stability in the country’s financial system. A bank’s capital serves as an indicator of its financial strength.
The BSP, meanwhile, said that a capital restoration plan would ensure that a bank’s capital base aligns with its risk exposure while remaining compliant with CAR standards.
The creation of the Maharlika Investment fund faced significant criticism as it breezed through congressional approval and speedily enacted into law in 2023. Critics have raised concerns about insufficient safeguards against corruption and questioned the use of state-run banks’ funds for the investment corporation.
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