BSP Furthers Sustainable Finance Policy Agenda, Issues Other Updates
The Central Bank of Philippines (BSP) issued an update related to the integration of sustainability principles in the investment activities of banks, published a circular on the domestic systemically important bank (D-SIB) framework, released a guidance paper on the conduct of institutional risk assessment (IRA), and issued a statement requesting financial institutions to adopt measures against cyber attacks.
Below are the key highlights of these recent updates:
- BSP announced that it is now in its third phase of sustainability-related regulations, with the recent release of draft guidelines on the integration of sustainability principles in investment activities of banks. The finalization of this policy proposal is targeted for August 2022. The first and second phases were marked by issuances of the Sustainable Finance Framework in April 2020 and the Environmental and the Social Risk Management Framework in October 2021. These regulations set out the expectations on the integration of sustainability principles in banks’ core strategies, governance, and risk management frameworks, especially in the areas of credit and operational risks. BSP specified that it will enhance its data collection tools to facilitate the assessment of climate- and other environment-related financial impact. It will also supplement the existing regulations on stress testing with guidelines that integrate climate stress testing design. Moreover, BSP is looking into potential regulatory incentives to further mainstream sustainable finance. BSP will soon release its 11-point strategy to implement the Sustainable Central Banking Program.
- BSP published a circular on amendments to the framework for dealing with D-SIBs. The circular states that the list of D-SIBs shall be assessed or determined annually based on the latest available data submitted by each bank and shall be subject to approval of the Monetary Board. The results shall be released annually. Banks identified as D-SIBs shall be informed individually, including the bucket they belong to and the individual score for each indicator. The circular shall take effect immediately after its publication in the Official Gazette or in a newspaper of general circulation.
- BSP published a guidance paper on the conduct of institutional risk assessment. The guidance paper provides practicable insights in the conduct of the institutional risk assessment to achieve optimal results that will inform risk-driven approach in the design and implementation of preventive measures to detect and mitigate money laundering, terrorist financing, proliferation financing, and sanctions risks. The guidance paper sets out the regulatory expectations and provides practical guidance and insights to assist financial institutions in the conduct of their institutional risk assessment, considering existing regulations, relevant international standards, and industry best practices. It presents a general approach that is flexible and can be tailored fit to the nature and complexity of financial institutions’ activities and operations, including those with simple business models.
- BSP has requested supervised financial institutions to adopt robust control measures against cyber fraud and attacks on retail electronic payments and financial services. BSP highlights that financial institutions should regularly conduct risk assessments of their product features, business rules, as well as application controls, and enforce appropriate enhancements and mitigation measures. BSP also encourages collaboration among financial institutions and the use of information sharing platforms such as the Bankers Association of the Philippines’ Cyber Incident Database, to expedite fraud investigations and recovery of funds, and proactively address emerging fraud schemes. In March 2022, BSP published a memorandum which recommends control measures against cyber fraud and attacks on retail electronic payments and financial services.
Related Links
- Press Release on Guidelines on Integration of Sustainability Principles
- Circular on Guidelines on Integration of Sustainability Principles (PDF)
- Notification on Circular on D-SIBs
- Circular on D-SIBs (PDF)
- Notification on Institutional Risk Assessment
- Guidance Paper on Institutional Risk Assessment (PDF)
- Press Release on Measures Against Cyber Attacks
Keywords: Asia Pacific, Philippines, Banking, Basel, Sustainable Finance, ESG, Climate Change Risk, D-SIBs, Institutional Risk Assessment, Cyber Risk, ML TF Risk, BSP
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Michael Denton, PhD, PE
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
Previous Article
EC Adopts Delegated Regulation to Amend Liquidity Coverage RulesRelated Articles
APRA Publishes Results of Climate Risk Self-Assessment Survey
The Australian Prudential Regulation Authority (APRA) has published the findings of its latest climate risk self-assessment survey conducted across the banking, insurance, and superannuation industries.
ACPR Publishes Updates Related to CRD IV and Covered Bonds
The French Prudential Supervisory Authority (ACPR) published a notice related to the methods for calculating and publishing prudential ratios under the Capital Requirements Directive (CRD IV) and the minimum requirement for own funds and eligible liabilities (MREL).
BIS Paper Contributes to Debate on Regulating NBFIs and Big Techs
The Financial Stability Institute (FSI) of the Bank for International Settlements recently published a paper proposing a framework for classifying financial stability regulation as either entity-based or activity-based.
EIOPA Publishes Guidance on Climate Change Scenarios in ORSA
The European Insurance and Occupational Pension Authority (EIOPA) published the risk dashboard based on Solvency II data and the final version of the application guidance on climate change materiality assessments and climate change scenarios in the Own Risk and Solvency Assessment (ORSA).
EBA and ECB Respond to Proposals on Sustainability Disclosures
The European Banking Authority (EBA) and the European Central Bank (ECB) published their responses to the consultations of the International Sustainability Standards Board (ISSB) and the European Financial Reporting Advisory Group (EFRAG) on sustainability-related disclosure standards.
BIS Report Notes Existing Gaps in Climate Risk Data at Central Banks
A Consultative Group on Risk Management (CGRM) at the Bank for International Settlements (BIS) published a report that examines incorporation of climate risks into the international reserve management framework.
EBA Publishes Multiple Regulatory Updates for Regulated Entities
The European Banking Authority (EBA) published the final guidelines on liquidity requirements exemption for investment firms, updated version of its 5.2 filing rules document for supervisory reporting, and Single Rulebook Question and Answer (Q&A) updates in July 2022.
EIOPA Issues SII Taxonomy and Guide on Sustainability Preferences
The European Insurance and Occupational Pensions Authority (EIOPA) published Version 2.8.0 of the Solvency II data point model (DPM) and XBRL taxonomy.
EESC Opines on Proposals on CRR and European Single Access Point
The European Union published, in the Official Journal of the European Union, an opinion from the European Economic and Social Committee (EESC); the opinion is on the proposal for a regulation to amend the Capital Requirements Regulation (CRR).
HM Treasury Publishes Multiple Regulatory Updates in July 2022
HM Treasury published a draft statutory instrument titled “The Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2022,” along with the related explanatory memorandum and impact assessment.
