November 20, 2014

BSP to draft new liquidity rules

According to an article from the Philippine Daily Inquirer, the BSP (central bank) is currently drafting regulations that will require banks to maintain a certain level of liquidity. The new liquidity rules are part of Basel 3 policies that were agreed upon by global regulators in response to the 2008 global financial crisis.

The new rules will require banks to setaside at least three months’ worth of short-term liabilities and at least a year’s worth of long-term liabilities. The draft rules will likely be released by January next year. The new liquidity rules follow a series of policy rules and guidelines that are meant to improve the capital adequacy and credit standards of local banks.

Our take: We view the new liquidity rules as part of efforts by international regulators to formalize and harmonize liquidity standards across countries. Though the draft rules have not yet been released, we believe that local banks will be in a good position to comply with these requirements, given the ample liquidity seen in their balance sheets, as well as the build-up in their investment portfolios. – WealthSec