Risk-Based Capital Adequacy Platform in the Philippines
Implementation of Basel 2
The Bangko Sentral ng Pilipinas offers completed the adoption of the Basel 2 framework for a lot of universal and commercial financial institutions (U/KBs) and the subsidiary banking institutions and quasi-banks on both solo and consolidated facets.
It should be remembered that the 3 pillars of Basel 2 are (1) Minimum Capital Requirements, (2) Supervisory Assessment Process, and (3) Market Discipline. The first and third pillars were implemented through the issuance of Circular No . 538 dated some August 2006 which required effect on one particular July 2007. The said guidelines suggest the menu of approaches that may be used in computing the regulatory capital requirements intended for credit, market and operational risks, as well as additional supervisory information which will needs to be disclosed to the open public under Quitar III.
To address the second expoliar, the BSP issued Rounded No . 639 on 12-15 January 2009. This took effect on you January 2011 and was made applicable to U/KBs by a consolidated level just. Circular Number 639 provides the guiding principles that (1) banks ought to follow in designing all their Internal Capital Adequacy Examination Process (ICAAP), and (2) BSP supervision and evaluation personnel should consider in determining a bank's ICAAP, joining the bank within an ICAAP-dialogue, and proposing prudential measures, in the event deemed necessary. On twenty-eight July 2011, the BSP came up with supplemental guidelines for the ICAAP submitting of Philippine branches of foreign banks which was embodied in Circular No . 731 dated twenty-eight July 2011. The ICAAP submissions of Philippine international bank limbs are expected to get designed in compliance with the mother nature, size and complexity of their businesses in the Philippines.