FINANCIAL regulators on Thursday cast a wider net
to capture much more real-estate transactions than was possible under
earlier rules which now include a ceiling not just on loans but
investments as well.
Also, Bangko Sentral
ng Pilipinas Gov. Amando M. Tetangco Jr. kept unchanged at 20 percent
the ceiling on real-estate loans that banks and financial institutions
must observe at all times. The BSP, however, served notice that such may
be reset higher should the observation period now in effect warrant a
change in the ceiling down the line.
“The
new guidelines provide a more comprehensive measure of a bank’s
real-estate exposure. It now includes loans as well as investments in
debt and equity securities, the proceeds of which shall be used to
finance real estate activities,” Tetangco said just before he spoke
before a crowd of bank treasury and finance officials gathered at the
Makati Shangri-la Hotel.
The treasury and finance summit was hosted by the Bank of the Philippine Islands.
Tetangco
said the Monetary Board agreed to freeze for the moment the maximum
exposure any bank may extend to the real-estate sector at 20 percent but
vowed to “review the ceiling after we get the reports from the banks to
see if there is a need to adjust.”
This
new restriction was announced just a day after the BSP reported a huge
jump in the balance of payments surplus from only $14 million in June to
$3.18 billion in July.
Tetangco
previously reported a huge chunk of that surplus may be traced to “hot”
money inflows also known as portfolio investments.
Of
net portfolio inflows of $963 million reported in July, a total $823
million were invested in debt or equity securities bought and sold at
the Philippine Stock Exchange while another $175 million were for the
purchase of peso-denominated government securities.
Tetangco
said the new guidelines “amend the previous policy of excluding loans
granted to individuals to finance the acquisition and/or construction of
residential real estate for own occupancy and those extended to land
developers/construction companies for the development of socialized and
low-cost housing, among other things.”
Tetangco
tempered concerns the expanded real-estate guidelines arose from a
dramatic rise in asset prices in recent months, particularly real
estate, saying real-estate loans were at only 14 percent of the banks’
total loan exposure based on latest data.
“In
terms of loans, it is comfortably below 20 percent. If I am not
mistaken, it is more or less 14 percent [based on] the latest that I’ve
seen,” he said.
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