BSP keeps an eye on banks' real-estate loans
MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) is keeping an eye on the banks’ lending activities to the real-estate sector, including the formerly exempt areas of socialized housing and residential loans, for signs of problems.
But while regulatory vigilance has heightened, BSP Deputy Governor Nestor A. Espenilla Jr. ruled out taking such drastic steps as raising the 20-percent ceiling on real-estate loans, for instance.
He told reporters the 20-percent ceiling would be maintained for now but that prospectively, this could change, depending on what may be unearthed from the ongoing evaluation.
The yardstick used to measure the real-estate exposure of the country’s lenders does not include loans granted to developers of socialized-housing schemes and on residential loans.
Only recently, however, even socialized-housing loans and loans for residential purposes were included in measuring the extent of bank exposure as a precautionary step against the likelihood of a property bubble
down the line, Espenilla said.
“Prospectively, we will start counting [even the exempt areas] but we will not touch the 20-percent ceiling on real-estate loans,” he said.
According to the deputy governor, the BSP only wants to understand the true extent of lending activities in the sector and arrive at a more accurate picture of what is happening.
“We only want to understand how exposed the banks are and are not changing any limit yet,” he reiterated.
It was possible for any bank, for instance, to keep its real-estate loans well within the 20-percent ceiling even though the same loans may have already exceeded 100 percent of capital, Espenilla said.
Excess loan limits in any measure are dangerous in that a bank could fold under the weight of soured non-performing loans.
“We want to see banks from the angle of capital and not just from the total loan-portfolio point of view,” he said.
He hinted broadly that thrift banks may be mandated down the line to come up with a larger threshold capital when viewed from this perspective, although he clarified the BSP has not yet been convinced this was necessary.
“A higher capital is an option but we are not yet proposing anything like that,” Espenilla said.
The signal, clearly, is that the BSP is watching over the industry with an eagle eye.
“We will be remiss if we don’t send the signal,” Espenilla said.