Fitch cites improvement in PHL banking regulation
Fitch Ratings lauded improvements in banking regulation in the Philippines, but cited the need for additional structural reforms.
In its latest report on the Philippines, titled “Philippine Banking Prudential Regulations,” the credit rating firm said that the latest regulations issued by the Bangko Sentral ng Pilipinas, led by those that promote good governance, are seen to aid in the stability of the country’s banking sector.
An example of one these regulations is the directive that tightened qualifications and roles of independent bank directors in order to help ensure they operate in a manner that is beneficial for all stakeholders and not just for majority owners.
“Fitch expects corporate governance quality in the Philippines to evolve gradually, which may help to somewhat address common concerns associated with bank ownership by a few family-owned conglomerates,” Fitch said in its report.
Fitch also said banks in the Philippines are likely to remain strong even if the BSP imposes higher capital requirements in observance of global regulatory trends. This is because banks in the country are sufficiently capitalized.
However, Fitch said that it is unlikely for structural problems in the Philippine banking system to be resolved immediately. These problems include the concentration of bank ownership to a few family-owned conglomerates and the heavy concentration of corporate loans to a few big clients. — DVM, GMA News
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