Featured Product

    BSP Sets Out Sustainable Finance Strategy and Rules on Borrower Limits

    The central bank of Philippines (BSP) announced that the Monetary Board approved the amendments to the regulations on Single Borrower’s Limit (SBL). BSP also announced its strategy, known as the Sustainable Central Banking Strategy, for fostering a policy environment conducive to the adoption and growth of sustainable finance.

    The amendments to Single Borrower’s Limit rules include the credit risk transfer arrangements and the expansion in the definition of capital, which is used for determining compliance with varied prudential limits, including the Single Borrower's Limit. The amended rules provide minimum operational requirements for a credit risk transfer arrangement to be considered as effective. These are patterned after the credit risk mitigation requirements of the Basel III capital standards, which ensure that a particular credit risk transfer arrangement is binding on all parties, is legally enforceable in all relevant jurisdictions, and is direct, explicit, irrevocable, and unconditional, among others. BSP will dispense with the prior BSP approval requirement on every credit transaction covered by a credit risk transfer arrangement for these to be excluded from exposures that are subject to Single Borrower's Limit. The framework also includes the use of 30% Single Borrower Limit by all banks. The new rules take effect on July 01, 2023 to provide banks with reasonable time to make the necessary adjustments to their policies and procedures to ensure a smooth transition to the operational requirements for employing credit risk transfer arrangements. Banks shall continue to use the existing Single Borrower Limit framework as of end-December 2022 during the transition period from January 01, 2023 to June 30, 2023 to minimize disruption in the lending operations of banks. 

    Another development is the publication of the Sustainable Central Banking strategy, which outlines the following 11 action points integrating sustainability principles in its key operations and functions:

    • Conduct a comprehensive vulnerability assessment of the Philippine economy and financial system, accounting for physical and transition risks and other environmental risks
    • Enhance mandatory disclosures of climate-related financial risks by all banks in the Philippines, building on the Task Force on Climate-related Financial Disclosures (TCFD) recommendations
    • Issue guidance on mandatory climate stress testing for banks
    • Integrate environmental and social risks into prudential practices
    • Incorporate macroeconomic effects of climate change into monetary policy analysis
    • Consider the incentive schemes for the promotion of green lending by banks
    • Include sustainability considerations in portfolio management and risk management of BSP and sign the UN Principles for Responsible Investment (UN PRI)
    • Develop a task force for inclusive green finance
    • Include climate-related financial disclosures in the Annual Report of BSP
    • Adopt sustainable practices for own facilities and operations of BSP
    • Roll out a capacity-building program for all staff in relevant areas

    As part of its strategy BSP is, in the near future, expected to issue regulations covering the following areas:

    • Conduct of climate risk stress testing by banks
    • Amendments to Disclosure Requirements under Circular No. 1085 on Sustainable Finance Framework
    • Enhancements of prudential reports for data collection and surveillance analysis
    • Incentivized lending or financing of green or sustainable projects or activities
    • Development of sustainable finance taxonomy


    Related Links

    Keywords: Asia Pacific, Philippines, Banking, Basel, Credit Risk, Large Exposures, Regulatory Capital, ESG, Climate Change Risk, Sustainable Finance, Taxonomy, Stress Testing, BSP

    Featured Experts
    Related Articles

    BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks

    The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.

    March 13, 2023 WebPage Regulatory News

    OSFI Finalizes on Climate Risk Guideline, Issues Other Updates

    The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.

    March 12, 2023 WebPage Regulatory News

    BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending

    BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.

    March 03, 2023 WebPage Regulatory News

    HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks

    The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.

    March 02, 2023 WebPage Regulatory News

    BCBS Report Examines Impact of Basel III Framework for Banks

    The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.

    February 28, 2023 WebPage Regulatory News

    PRA Consults on Prudential Rules for "Simpler-Regime" Firms

    Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.

    February 28, 2023 WebPage Regulatory News

    DNB Publishes Multiple Reporting Updates for Banks

    DNB, the central bank of Netherlands, updated the list of additional reporting requests and published additional data quality checks and XBRL-Formula linkbase documents for the first quarter of 2023.

    February 28, 2023 WebPage Regulatory News

    NBB Sets Out Climate Risk Expectations, Issues Reporting Updates

    The National Bank of Belgium (NBB) published a communication on climate-related and environmental risks, issued an update on XBRL reporting

    February 24, 2023 WebPage Regulatory News

    EBA Updates Address Securitization Standards and DGS Guidelines

    The European Banking Authority (EBA) published the final draft of the regulatory technical standards that set out conditions for assessment of homogeneity of the underlying exposures in simple, transparent, and standardized (STS) securitizations.

    February 21, 2023 WebPage Regulatory News

    FSB Publishes Letter to G20, Sets Out Work Priorities for 2023

    The Financial Stability Board (FSB) published a letter intended for the G20 Finance Ministers and Central Bank Governors, highlighting the work that FSB will take forward under the Indian G20 Presidency in 2023

    February 20, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8793