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The Philippine Guarantee Corp. (Philguarantee) and Tiu-led Sterling Bank of Asia Inc. signed a ₱5‑billion housing retail guarantee facility to expand credit access amid shifting global economic conditions.
The agreement inked on March 17 establishes a sovereign-backed buffer that allows the thrift lender to scale its residential portfolio while shielding its balance sheet from potential defaults.
“For Philguarantee, our partnership with Sterling Bank of Asia plays an important role in fulfilling our mandate of strengthening the country’s credit delivery system,” Pascual said.
The facility functions as a critical mechanism for “operational hardening” within the Philippine banking sector. By leveraging Philguarantee’s sovereign backing, Sterling Bank can apply a zero-percent risk weight to the guaranteed portion of its loans, effectively freeing up Tier 1 capital for further deployment.
For his part, Teresita Bustard, SVP of the Housing Guarantee Group at Philguarantee, said, “As a GOCC (government‑owned and controlled corporation) attached to the Department of Finance, Philguarantee provides credit guarantees that reduce the risks of lending to sectors vital to economic growth, particularly housing, which is often underserved.”
Sterling Bank, a mid-sized player in the Philippine thrift sector, intends to use the facility to reach a broader demographic of homebuyers without compromising its historical credit quality.
“Philguarantee provides an important mechanism that enables banks like Sterling Bank of Asia to extend housing loans with greater confidence and reach more deserving borrowers,” Sterling Bank president and CEO Cecilio San Pedro said. “In simple terms, this partnership allows us to do what the banks are meant to do—support aspirations while ensuring that lending remains prudent and sustainable.”
