Tetangco: Bangko Sentral needs more capital to manage losses

The Bangko Sentral ng Pilipinas will ask Congress for an increase in capital when it submits proposed amendments to the central bank charter in July, its top official said Tuesday.   “The direction that we are going for now is an increase in capitalization,” Bangko Sentral Governor Amando Tetangco Jr. told reporters at the sidelines of the Euromoney Philippines Investment Forum in Makati City. “That will be part of the review of existing provisions and formulation of the proposed amendments that we will present to Congress when it convenes,” he added. Central bank officials have pushed for amendments to Republic Act No. 7653 or the New Central Bank Act of 1993 in the 15th Congress, but these were never passed.   The 15th Congress is currently on break for the mid-term elections, and will resume for a one-week session in June. Work, however, will resume full-swing in July when new officials are sworn in. The New Central Bank Act mandated that the government infuse Bangko Sentral with P50 billion in capital. Of the P50 billion, only P40 billion has so far been given to the central bank. Last year, the government gave it P20 billion. Previous tranches each worth P10 billion were given to the bank in 2011 and 1993. “The requirements of the economy have increased. The P50 billion was set 20 years ago,” Tetangco said. Last December, Tetangco said additional capital will help the central bank adapt to speculative inflows that buoy the peso's strength. He has also noted that capital infusion will help in the agency's recuperation from losses. The Bangko Sentral has been in the red for almost two years, with its losses totaling P68.36 billion in the third quarter of 2012, up 189 percent from P23.62 billion in the same period in 2011. The Philippine economy’s strength amid global uncertainties has resulted in the influx of foreign portfolio investments that caused the peso’s rise, causing a decrease in value in the Bangko Sentral’s dollar holdings. — BM, GMA News