BSP mulls tighter rules on real estate exposure of banks

Posted at 10/11/12 6:48 PM

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) is mulling tighter rules on the real estate exposure of banks next year.
BSP Deputy Governor Nestor Espenilla Jr. said banks are required to submit reports to the BSP on their exposure to the real estate sector before the end of the year.
He said the BSP will use the data from the reports to determine if there is a need to tighten the existing rules.

Under existing regulations of the BSP, banks should limit "real estate exposure" to a maximum 20% of their total loan portfolio. "Real estate exposure" is defined as loans granted to developers of residential and commercial properties.

Espenilla said the definition does not cover other forms of real estate exposure, such as housing loans  to individual borrowers, loans to entities engaged in socialized housing projects and investments in securities sold by real estate companies.

The BSP wants to know the extent of the banks' other forms of real estate exposure, he said.

"Our objective right now is to have an accurate picture of the actual extent of real estate exposure that banks have. Once we get the accurate picture… we can redefine the formula or impose more regulations if necessary," Espenilla said.

"But again, I emphasize that at this point in time, we are not seeing a crisis in the property market. But I think it's only prudent for the BSP to be vigilant,” he said.