Philippine central bank stretches relief to foreign bank branches

The Philippine central bank extended its regulatory relief to branches of foreign banks established in the country prior to 2014.

The Bangko Sentral ng Pilipinas said it will not impose sanctions on branches of foreign lenders for breaching the single borrower's limit until Dec. 31, according to a Dec. 28, 2020, release.

The relief measure is expected to help boost lending in support of businesses and sectors, as well as pump prime economic growth and post-pandemic recovery, central bank governor Benjamin Diokno said. The move will also diversify credit exposures, particularly in financing big-ticket projects, that otherwise will be concentrated to domestic banks.

As a control measure, the central bank said new loans, credit accommodations or guarantees extended and existing credit exposures which are restructured, renewed and refinanced from Jan. 1, 2021, to Dec. 31, 2021, shall not exceed the prescribed percentage limit using as reference point twice the level of capital or net worth of a foreign bank branch.

There are 14 foreign bank branches operating in the Philippines prior to the enactment of Republic Act No. 10641, or the law that expanded foreign bank entry in the country.