By Prinz P.
Magtulis (The Philippine Star) | Updated July 3, 2013 - 12:00am
MANILA,
Philippines - Measures to temper the real estate boom on fears of asset bubbles
are not being considered, with the central bank wanting a closer look on where
funds on the sector are going, officials said.
“We are now
analyzing the reports and we will see if there is going to be a need to adopt
measures. But at this point in time, we do not see the need for that,” Bangko
Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. told reporters late
Monday.
The BSP is
using its latest data on banks’ real estate exposure as “basis” to determine
the “types of exposures” lenders have, BSP managing director Johnny Noe Ravalo
said yesterday.
In 2012,
property exposure of banks – measured through the proportion of real estate
loans to total loan portfolio – hit 20.86 percent, breaching the 20-percent
regulatory cap instituted after the 1997 Asian financial crisis.
The breach
followed the removal of several exemptions to the original computation. Under
the present formula, exclusion granted to low-cost housing and guaranteed loans
were scrapped, while investments to securities were included.
The revision
in the calculations, the central bank said, was meant to give policymakers a
clear picture of how much banks are lending to the real estate sector on fears of
asset bubbles.
Bubbles are
formed because of huge demand but what is being prevented is the bursting of
the bubble that emanates from defaults on loans used to buy real properties.
“We are trying
to determine the supply and demand dynamics governing the loans,” Ravalo
pointed out.
In the
process, the central bank wants property loans broken down into different
market segments namely condominiums, low-cost housing and “other” segments such
as property security placements.
Ravalo said
regulators have began asking banks and government agencies, such as the Housing
and Development Coordinating Council for data, but the problem is they are
using different definitions for each segments.
“We want to have
a clear picture of the landscape. To be able to do that, we made up tentative
sort of definitions (for the segments),” he explained.
“It is a
continuing process,” Ravalo said, adding that reports will be available within
the year.
In addition,
study on possible re-calibration of property exposure, from total loan
portfolio to bank capital, is also ongoing.
“As far as
(BSP) is concerned, we can always make the alignment of what is plus and minus
(to the computation) for as long as the yardstick is clear,” Ravalo said.
For Tetangco,
present demand for real estate is backed by “fundamental support” of a growing
economy that increases salaries and wages. A “significant backlog” of four
million units in the socialized housing is also a reason.
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