MANILA, Philippines - Measurements
used to gauge banks’ exposure to the real estate sector have been expanded by
the Bangko Sentral ng Pilipinas (BSP), which noted of the need for a more
comprehensive data even as it stressed that real estate prices remained
manageable for now.
“The Monetary Board approved a more
comprehensive method of measuring the real estate exposure of banks,” BSP
Governor Amando Tetangco Jr. told participants of the 4th Annual Corporate
Treasury and Chief Financial Officer Summit-Philippines held in Makati
yesterday.
Specifically, exemptions to the
exposure’s computation were scrapped, Tetangco said, while bank investments
which shall later on finance “real estate activities” will now be included.
Banks’ property exposure is the
proportion of total amount of real estate loans against their aggregate loan
portfolio. This include bank credit that goes to the real estate sector such as
those used by corporations to build condominiums.
Previously, BSP, under Circular 600
issued in 2008, excluded in the computation loans extended to individuals for
purchase or construction of houses for own-occupancy and those used for
low-cost housing projects.
These exemptions are now no longer
valid, Tetangco said. He added that expanded rules will now also cover bank
investments in equities and securities, “proceeds of which shall be used to
finance real estate activities.”
“There are some forms of funding that
go to the real estate sector that do not come in the form of loans. We want to
capture that and see how much funding is really going to the real estate
sector,” he explained to reporters after his speech at the summit.
“We just want to get the complete picture of
the exposure of banks to the real estate sector,” he added.
Banks will be required to submit
quarterly reports of compliance to the new guidelines beginning next year, the
BSP said.
Latest BSP data showed banks’ property
exposure rose to 14.52 percent as of end-2011, up from 14.25 percent the
previous year. While Tetangco said the figure remains below the BSP-mandated
20-percent cap, it will be good to monitor developments in real estate lending
to avoid the formation of asset bubbles.
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