The Bangko Sentral ng Pilipinas (BSP) will not publicly disclose its list of domestic systemically important banks (D-SIBs) for fear that releasing the identities of the “too big to fail” banks could be viewed as “endorsements”.
Banks considered as D-SIBs are the country's largest lenders. D-SIBs are banks whose distress or disorderly failure would cause significant disruptions to the wider financial system and economy.
“Under the current arrangement, the Bangko Sentral (BSP) does not publicly disclose the identified D-SIBs as disclosure may have legal implications pursuant to the New Central Bank Act, as amended,” said BSP in an email to Manila Bulletin.
The BSP is worried that releasing the D-SIBs list may only confuse the banking public. With that, the central bank would rather keep the identities confidential.
“This arrangement (non-disclosure of D-SIBs) intends to minimize potential misinterpretation of the list as an endorsement of selected banks,” the BSP said.
The decision not to name D-SIBs or disclose even the number of D-SIBs is final after BSP Governor Benjamin E. Diokno and two previous other central bank chiefs -- the late Nestor A. Espenilla Jr. and former Governor Amando M. Tetangco Jr. – all reviewed and assessed the implications of public disclosure.
Diokno and the BSP has assured however that it will “continue to work on further deepening the understanding of the public pertaining to the nature of a D-SIB and the corresponding BSP's regulatory framework.”
In the Asian region, central banks that have disclosed their own D-SIBs include Malaysia, Indonesia, Singapore, Hongkong and Mainland China, South Korea, Japan and India.
In a previous interview, BSP Deputy Governor Chuchi G. Fonacier said the BSP regularly updates and inform individual banks if they are considered as D-SIBs. D-SIBs are required to maintain additional Common Equity Tier 1 (CET1) capital on top of the existing minimum CET1 requirements. D-SIBs must also meet higher supervisory expectations.
While BSP has never released the list of the D-SIBs, in 2016 they classified 14 unnamed banks as D-SIBs on their website but deleted the information later on.
Earlier this month, Diokno said that since the BSP and other financial regulators now have a better ability to monitor “mixed conglomerate structures” they will also have an improved capacity to scrutinize D-SIBs under the Supervisory College of the Financial Sector Forum (FSF).
Diokno said most D-SIBs are part of conglomerates with mixed conglomerate structures.
FSF members who are also in the Supervisory College are BSP, Philippine Deposit Insurance Corp., the Securities and Exchange Commission and Insurance Commission. The Supervisory College will start a closer monitoring and probe of financial conglomerates in the second quarter this year and this will include its potential impact on D-SIBs.
In the Philippines, financial groups with banks as parent companies or known as financial conglomerates include BDO Unibank Inc. of the SM Group, Bank of the Philippine Islands of the Ayala Group and the Ty family-controlled Metropolitan Bank & Trust Co. This list also include Lucio Tan Group’s Philippine National Bank, the Yuchengco Group’s Rizal Commercial Banking Corp., the Dy-owned Security Bank Corp. and the Aboitiz Group’s Union Bank of the Philippines.
Banking groups include China Banking Corp. which is a sister bank of BDO, Asia United Bank Corp., and the government-owned Land Bank of the Philippines. The San Miguel Group also has a banking unit, Bank of Commerce, which is about to become a universal and commercial bank as well.
Diokno said earlier that since the FSF member agencies include those that supervise non-BSP supervised entities, the Supervisory College members will be able to discuss emerging group-wide risks and vulnerabilities identified in the conglomerate-level including those from non-BSP supervised entities which may have impact on D-SIBs.