Financial Safety Net Arrangements in the Philippines

Financial Safety Net Arrangements in the Philippines

ASIA-PACIFIC REGIONAL COMMITTEEREGIONAL WORKSHOP

17 July 2017Yogyakarta, Indonesia

Shirley G. FelixVice President

Examination Group IPHILIPPINE DEPOSIT INSURANCE CORPORATION

Outline

1. Overview of the Philippine Financial System

a. Safety Net Players: Banking Institutions

b. Safety Net Players: Non-Banking Institutions

2. Financial Sector Forum

3. Financial Stability Coordination Council

4. Challenges and Next Steps

2

Philippine Financial System

Commercial

Banks - 42

Thrift Banks - 59

Rural Banks - 498

With Quasi-Banking

Functions - 9- Investment Houses - 3

- Financing Companies -5

- Others - 1

Without Quasi-Banking

Functions - 5,540- Investment Houses - 3

- Non-Stock Savings and

Loans Association - 67

- Pawnshops - 5,401

- Others - 69

Sources: Bangko Sentral ng Pilipinas (March 2017); Insurance Commission (May 2017);

Securities and Exchange Commission (Dec. 2016)

Insurance

Companies - 101

Capital Market

Institutions - 232

Investment

HousesFinancing

Companies

Insurance

CompaniesPawnshops

Savings and Loan

Associations

Capital Market

Institutions

Philippine Financial Safety Net PlayersBanking Institutions

Philippine Deposit Insurance Corporation• Settlement of Insurance Claims• Insurance Risk Mitigation

- Financial Supervision and Regulation - Resolution of Problem Banks

• Receivership and Liquidation of Closed Banks

Bangko Sentral ng Pilipinas• Currency issue and Liquidity Management • Management of foreign currency reserves• Determination of exchange rate policy• Financial Supervision and Regulation• Appointment of a Bank Conservator• Designation of PDIC as Receiver of Closed Banks

Memorandum of Agreements on:• Exchange of data and information on supervision

and/or regulation of banks (2002)

• Information and reports on bank examination findings (2005)

• Modification of the Evaluation Process for Merger and Consolidation (2009)

• Bank Examination and Information Exchange (2013)

Joint Bank Strengthening Programs• Strengthening Program for Rural Banks (2010)• Consolidation Program for Rural Banks (2015)

Joint Undertakings of BSP and PDIC

Philippine Financial Safety Net PlayersNon-Bank Financial Institutions

Investment

HousesFinancing

CompaniesInsurance

CompaniesPawnshops

Insurance Commission• Regulation and supervision of

insurance and pre-need industries in the Philippines

Securities and Exchange Commission• Supervision of all registered business entities in the country• Policymaking in capital and securities market• Control over and approval of security registration statements• Power to investigate violations of securities laws and impose

sanctions • Power to issue subpoenas, punish for contempt, and issue cease

and desist orders

Bangko Sentral ng Pilipinas• Regulation of non-bank

institutions performing quasi-banking functions

Savings and Loan

Associations

Capital Market

Institutions

Asian Financial

Crisis

• Established in 2004

• To harmonize supervisory standards and regulatory policies

• To ensure adoption of coordinated actions in addressing vulnerabilities and weaknesses in the supervised institutions

– Consumer protection and education

– Information exchange and dissemination

Financial Sector Forum

9

Financial Sector Forum (Mother Committee)• Highest body of FSF composed of the four agency heads.• Central Bank Governor as Chairperson

FSF Multilateral Working Committees• Supervision and Regulatory Policy Coordination• Information Exchange • Consumer Protection and Education

Financial Sector ForumStructure

10

• Multilateral Memorandum of Agreement on Information Exchange

• Setup of Electronic Information Sharing (EIS)

• Continuous conduct of financial education expos in various cities nationwide

• Continuous participation in the Financial Regulators Forum

Financial Sector ForumAccomplishments

11

• Crisis simulation exercise (2011) held among members of FSF

• Results of exercise stressed the need for– more concrete coordination among the

authorities

– platform to coordinate issues of financial crisis management and financial stability

• Led to the creation of the Financial Stability Coordination Council

Financial Sector ForumAccomplishments

Global Financial

Crisis

Financial Stability Coordination Council

• Established in 2014

• To identify, manage and better understand the interconnectedness of the agencies

• To mitigate buildup of systemic risks in the financial system through information sharing

14

Financial Stability Coordination Council

Executive Committee• Highest body of the FSCC composed of Agency heads• Central Bank Governor as Chairperson

Steering Committee• Designs the strategic direction of the Council• Meets to discuss the outputs of Working Groups

before elevating to Executive Committee

Working Groups• Financial Crisis Management and Resolution• Corporate Leverage• Capital Market Reform• Communication Group• Shadow Banking: Real Estate

Structure

15

• Developed a Dashboard for risk surveillance

• Conducted debt profiling and debt analysis of non financial Corporations

• Conducted Corporate Financial Trend Survey (CFTS)

• Signed agreement with the Housing and Land Use Regulatory Board (HLURB) to gather data on real estate for risk monitoring

Financial Stability Coordination CouncilAccomplishments

Challenges and Next Steps

1. Work with new leadership of HLURB to roll out reporting template for real estate companies

2. Review of National Financial Crisis Management and Resolution Handbook

3. Secure corporate leverage data

4. Establish an effective system to communicate financial stability risks

16

Thank you.

Financial Safety Net Arrangements in the Philippines

APRC REGIONAL WORKSHOP17 July 2017

Yogyakarta, Indonesia