WebClick Tracer

September 24, 2023

Banks still ignore the central bank’s liquidity-enhancing window

The various banks, especially the less financially endowed, have remained indifferent to the availability of funds under the rediscounting window of the Bangko Sentral ng Pilipinas (BSP).

Latest data show the peso rediscount rate remained unchanged beginning March 8 this year at 2.5 percent for maturities of up to six months or 180 days.

It also did not matter that the rediscounting rate for the US dollar and Japanese yen remained frozen at the rates set in February at 2.50429 percent and 1.98862 percent. These rates were at only 2.30886 percent and 1.97937 percent, respectively, in January.

The BSP rediscounting window allows banks to convert their receivables into cash but at rates lower than their face value and by this mechanism put them in a position to grant new loans that generate new earnings.

This mechanism is useful during periods of stress in the banking system when liquidity is a struggle and the cost of funds spiral upward.

According to the BSP, not a single bank brought their pile of eligible peso assets for rediscounting the past two months this year and that their rediscounting operations last year succeeded in attracting the grand total of only P6.12 million.

A little over 65 percent of the rediscounts financed industrial processing projects across the country, some 25 percent funded capital asset expenditures but less than 10 percent were for working capital purposes.


Three rural banks merge to enhance financial stability

Three rural banks have successfully merged in a move aimed at bolstering their financial stability, as confirmed by the Bangko Sentral ng Pilipinas (BSP). The merger officially took effect on July 13, following the necessary regulatory approvals, as detailed in a circular letter signed by Bankero and BSP Deputy Governor Chuchi G. Fonacier on September 15.

Read More ...