Chuchi Fonacier
BSP Deputy Governor Chuchi G. Fonacier — PHOTO BY ASIA MICROFINANCE FORUM

BANKS WILL CONTINUE to provide basic financial services amid the enhanced community quarantine in the whole of Luzon, a central bank official said, while assuring a bank run is unlikely even as people look to hold cash during the lockdown period.

Asked whether a bank run is possible amid a lockdown in the country’s capital, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi G. Fonacier said in a text message: “Very unlikely. Banks are operating.”

“Banks are aware that basic banking services, ie., ATM (automated teller machine) services, withdrawals, deposits, should not be disrupted, mindful that they should also support the government’s enhanced community quarantine,” she said.

Banks are among the few establishments mandated to remain open during the enhanced community quarantine ordered by President Rodrigo R. Duterte effective Tuesday.

Bank runs happen when people rush to withdraw their money from lenders due to fear these financial institutions will run out of cash.

The BSP has assured over the weekend that banks have enough cash to service client requirements.

Asked when a bank run last occurred in the Philippines, Ms. Fonacier said: “Can’t recall as of now. Baka 70s pa (Maybe in the 70s).”

Sought for comment, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the banking industry remains resilient, backed by strong capitalization well beyond regulatory standards.

“The local banking industry has also been resilient and robust in recent decades and performed relatively better compared to other countries in past economic cycles such as during the global recession more than a decade ago as well as in the years that followed,” Mr. Ricafort said.

The BSP has required banks to have business continuity plans (BCPs) to allow sufficient financial and human resources to address business disruptions caused by unforeseen events, including the coronavirus disease 2019 (COVID-19) pandemic.

In an earlier memorandum, Ms. Fonacier said BSP-supervised financial institutions and operators of payment systems should ensure that their employees will not be affected by COVID-19.

In response, banks have started flexible working arrangements, including skeletal work forces to address these risks while maintaining services for bank clients. ATM transactions as well as online banking is also an option for clients.

The BSP has also approved the grant of temporary regulatory and rediscounting relief measures for BSFIs due to COVID-19’s spread.

Banks may avail of these packages, which include among others, the suspension of penalties for delays in reports and for legal reserve deficiencies, staggered booking of allowance for credit losses, and the exclusion of the exposure of affected borrowers from the computation of past due loan ratios, among others. These requests by lenders will then be assessed by the BSP on a case-by-case basis.

COVID-19 cases in the country reached 142 as of March 16, with 12 deaths recorded. — L.W.T. Noble