THE BANGKO SENTRAL ng Pilipinas (BSP) has pushed back the implementation of tighter standards for banks in reporting real estate loans and project financing agreements.
The central bank issued Memorandum No. M-2018-019, signed on June 11 by BSP Deputy Governor Chuchi G. Fonacier, which “rationalized” deadlines for lenders in submitting more detailed reports on project finance and real estate exposure. This pushed back the implementation of tighter rules originally set for this quarter.
Through Circular 976, signed in October 2017, the central bank required more detailed data from universal, commercial and thrift banks to enhance oversight on the volatile real estate sector at a time of continued double-digit credit growth. The circular also covers rural banks that are subsidiaries of big lenders.
These measures add to existing rules limiting the property exposure of banks, which include a cap on real estate loans equivalent to 20% of total loan portfolio net of interbank borrowings, as well as stress test limits that assume a 25% write-off in outstanding property debts.
The latest rules require banks to report details of real estate loans covering mid- and high-end housing units, as well as socialized and low-cost housing within a month after the end of every quarter starting 2018.
Full implementation has been pushed back to the third quarter, with loan data on solo basis (parent bank) due Oct. 19 and consolidated loan reports of banks and their subsidiaries due on Nov. 13.
Extensions were also given for big banks in reporting project finance deals. The BSP has set July 31 as the new deadline for the pilot run covering credit handed out in the first and second quarters while “live implementation” has been pushed back to Oct. 19 covering project funding as of end-September on solo basis.
Consolidated project financing reports for banking groups are due Nov. 13.
More detailed information on banks’ real estate exposure is meant to help the BSP make “a comprehensive assessment of the quality of bank loans and vulnerability of banks on risks arising from these exposures.”
The central bank has been closely monitoring the property market since the 1997 Asian financial crisis and the 2007-2008 global financial crisis. The latter particularly was triggered by widespread mortgage defaults in the United States which developed into a bank industry-wide crisis that, in turn, damaged financial institutions worldwide.
In April, however, the BSP eased lending ceilings imposed on banks by allowing construction firms implementing major infrastructure projects to have a separate borrowing limit as they secure funding from banks and quasi-banks, in order to support the “Build, Build, Build” infrastructure development program of the current administration. — Melissa Luz T. Lopez

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