Foreign Banks to Submit ICAAP

Article excerpt

MANILA, Philippines - The 16 foreign banks monitored by the central bank will start submitting its own Internal Capital Adequacy Assessment Process (ICAAP) to the Bangko Sentral ng Pilipinas (BSP) next month, the first time the BSP will be able to see how these banks assess their capital against their risk profiles.

Branches of foreign banks have not been required to submit their own ICAAP documents since there are arrangements between "home and host" supervisors of international banks.

Over the years, however, the BSP has been encountering difficulties in obtaining ICAAP assessments from the foreign banks' head offices overseas.

BSP in a report said it was not able to verify how foreign banks' domestic operations are incorporated in the plans of the parent bank and the extent that local circumstances are taken into account in the strategic and capital planning for the branch.

Of the 16 foreign banks, 13 operate branches such as Hong Kong and Shanghai Banking Corp. (HSBC), Citi Philippines, Standard Chartered Bank and Deutsche Bank. Three of the foreign banks are subsidiaries ABN Amro, Maybank Philippines and Chinatrust.

HSBC Philippines Senior Vice President and Head of Corporate Banking, Junie Veloso, said foreign banks have had to follow stricter ICAAP rules because of their parent company and compliance to their supervising central bank. …