THE Bangko Sentral ng Pilipinas (BSP) said the local banking sector has very little investment in China’s real-estate sector.
In a recent press briefing, BSP Deputy Director Maria Cynthia Sison said Philippine banks are largely domestic-oriented with cross-border exposures or claims from counterparties in other countries at 9.4 percent of total banking system assets. In terms of exposure to China, claims from counterparties based in China and its Special Administrative Regions are minimal, at 0.86 percent of total banking system assets, Sison added.
Earlier this week, one of China’s largest property developers China Evergrande Group fueled fears of a possible contagion over its potential default.
The BSP official, meanwhile, said Philippines banks are not expected to have any significant investments in Chinese real estate.
“Banks are only allowed to invest in real estate for two purposes. First, they can own real estate for their own use or as banking premises. Second, they are allowed to hold real-estate assets which are acquired in settlement of claims or foreclosed real-estate property. Banks are required under the Law to dispose of foreclosed real-estate property within five years,” Sison said.
BSP Governor Benjamin Diokno also earlier said that the Philippine banking system, in general, remains stable and is in a strong position to service the financing requirements of the recovering economy.
“The positive performance of the Philippine banking system is evidenced by sustained growth in its assets, deposits, and capital, as well as ample capital and liquidity buffers and loan loss reserves,” Diokno said.
“The BSP will continue to adopt policy reforms on risk governance aimed at promoting the continued safety and soundness of the financial system against the backdrop of rapid advancements in technological innovations, an evolving financial ecosystem, and the increasing attention towards the attainment of social and environmental goals,” the governor added.