MONETARY authorities have approved a new liquidity requirement aimed at bolstering a bank’s ability to withstand financial shocks, the Bangko Sentral ng Pilipinas (BSP) announced on Monday. Universal and commercial banks (UK/Bs), along with select subsidiaries, will have to comply with the Basel III requirement known as the net stable funding ratio (NSFR), adopted by the BSP’s policymaking Monetary Board as part of ongoing efforts to strengthen the domestic banking industry. The NSFR will complement another Basel III reform, the liquidity coverage ratio or LCR that was adopted by the Monetary Board in 2016. “The smaller institutions comprising of stand-alone thrift banks, rural banks, cooperative banks, and quasi-banks (QBs) are subject to the minimum liquidity ratio (MLR) requirement, which better suits their simpler liquidity risk profile,” it added. The Bangko Sentral has been introducing liquidity reforms over the past few years to improve the banking sector’s ability to absorb liquidity stress and lessen spillover risks to the wider economy.

Source: Manila Times June 04, 2018 16:41 UTC