THE Development Bank of the Philippines (DBP) plans to seek the extension of the regulatory relief granted in the wake of the state-owned bank’s having contributed P25 billion to the country’s first sovereign wealth fund, its top official said late Friday.
“We will seek regulatory relief, the same as what we sought [previously]…,” DBP President and CEO Michael de Jesus told reporters on the sidelines of the Bangko Sentral ng Pilipinas’ (BSP) annual reception for the banking community.
“We’re still working with the BSP on that,” de Jesus said, adding that the bank was seeking “comfort” and also claiming that it continued to meet minimum capital requirements.
Both DBP and the Land Bank of the Philippines (LandBank) sought regulatory relief in 2023 after both state-owned banks were tapped by the government to capitalize on the Maharlika Investment Fund.
Landbank contributed a larger P50 billion, and the combined P75-billion infusion was equivalent to 60 percent of the sovereign wealth fund’s P125-billion initial capitalization.
The International Monetary Fund (IMF), in its 2024 country report released last month, warned of potential risks to the financial system if capital restoration plans were not promptly enacted for both banks.
The IMF’s warning prompted Finance Secretary Ralph Recto to respond that the two banks remained on sound financial footing, with LandBank and the DBP having capital adequacy ratios (CARs) of 16.42 percent and 14.78 percent, respectively, as of November last year, below the required minimum of 10 percent.
Also under BSP regulations, universal banks must maintain a minimum capitalization ranging from P3 billion to P20 billion, depending on their branch network size. LandBank — the country’s second-biggest bank in terms of assets — has an authorized capital stock of P200 billion, while the DBP — in 10th place as of September last year — has P35 billion.
This month, the Finance department said it wanted Congress to approve changes to the DBP and LandBank charters to increase their capitalization to P300 billion and P1 trillion, respectively, to further strengthen their finances.
LandBank President and CEO Lynette Ortiz told reporters on Friday that the bank was not planning to seek and the bank does not plan to seek an extension, highlighting its financial resilience even amid significant contributions to government initiatives.
“We have had discussion[s] before that the regulatory relief was actually good for two or three years and that was really viewed from our perspective as a buffer, but certainly if you look at our financials, you look at our numbers, we have no need for it,” she added.
Last year, both Ortiz and de Jesus had said that they were not looking at seeking an extension.
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