BSP Extends Transitory Period on Single Borrower’s Limit of Foreign Bank Branches

The Monetary Board extended the transitory period allowing foreign bank branches to use twice the level of net worth as basis for determining the Single Borrower's Limit (SBL) until 31 December 2020. This will allow foreign bank branches existing prior to Republic Act (R.A.) No. 10641 to continue supporting the public sector's initiatives under the build, build, build program.

The extended transitory period will also provide the foreign bank branches with ample time to re-assess their credit exposures and implement measures to ensure compliance with the SBL regulations even with the reduced base amount starting 1 January 2021.

R.A. No. 10641 (An Act Allowing the Full Entry of Foreign Banks in the Philippines, Amending for the Purpose R.A. No. 7721) amended the regulatory capital composition of a foreign bank branch. The revised capital composition excludes Net Due to Head Office/Branches/Agencies Abroad account to align with the minimum capital requirement for domestic banks of the same category. The said account previously formed part of adjusted capital where prudential and/or regulatory limits, including the SBL, are anchored.

Since the implementation of R.A. No. 10641, the Monetary Board has already approved 12 foreign bank applications bringing the total number of foreign banks operating in the Philippines to 29.

Source: Bangko Sentral ng Pilipinas (BSP)