THE Financial Stability Coordination Council (FSCC) has reaffirmed the strength of the Philippine financial system but at same time continues to monitor concentration risks, or excessive exposure to a single borrower, industry, region, or asset class.
“The banking system’s resilience is underpinned by strong capital and liquidity,” Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. was quoted as having said during an FSCC meeting last March 13.
The central bank, in a statement on Thursday, said: “The FSCC remains vigilant against potential systemic risks. While corporate balance sheets remain sound, the council noted that concentrated corporate exposures could amplify shocks as linkages between large conglomerates and economic sectors increase.”
Members also discussed increases in corporate leverage, consumer credit and housing loans, the BSP added. While these reflect economic activity, it said the council noted that “growth and risk often travel together.”
The council is expanding its surveillance network, improving data quality and strengthening oversight to address risks from non-bank financial institutions adopting new business models, the central bank continued.
Philippine Deposit Insurance Corp. (PDIC) efforts to refine its early intervention frameworks to address bank distress swiftly and help preserve public trust and financial stability were also recognized during the meeting.
The FSCC is composed of the BSP, Department of Finance, Securities and Exchange Commission, Insurance Commission, and PDIC.
