Implementation of Basel II in the Philippines

The Revised Risk-Based Capital Adequacy Framework of the Bangko Sentral ng Pilipinas (BSP) is largely patterned after the International Convergence of Capital Measurement and Capital Standards, A Revised Framework commonly known as Basel 2.¹

The implementing guidelines of the framework covering Pillars 1 and 3 of Basel 2 (minimum capital requirements and disclosures requirements, respectively) were issued under Circular No. 538 dated 4 August 2006 and took effect on 1 July 2007. To address the Pillar 2 component, the BSP issued Circular No. 639 on 15 January 2009 which includes guidelines on banks’ Internal Capital Adequacy Assessment Process (ICAAP) and the BSP’s corresponding Supervisory Review Process (SRP). The guidelines under Circular Nos. 538 and 639 are applicable to all universal and commercial banks (U/KBs) and their subsidiary banks and quasi-banks on both solo and consolidated bases, although the Pillar 2 guidelines are applied at the consolidated level only. Upon the effectivity of Circular No. 639 on 1 January 2011, the BSP would have completed the implementation of Basel 2 for all U/KBs and their subsidiary banks and quasi-banks.

Stand-alone thrift banks (TBs), rural banks (RBs) and cooperative banks (Coop Banks), which refer to TBs, RBs and Coop Banks that are not subsidiaries of U/KBs, are covered by a separate capital adequacy framework referred to by the BSP as the Basel 1.5 framework. The implementing guidelines of Basel 1.5 are provided in Circular No. 688 dated 26 May 2010 which will take effect on
1 January 2012. Unlike the full Basel 2 framework, Basel 1.5 involves only a few key changes to the old risk-based capital adequacy framework under Circular No. 280 dated 29 March 2001, as amended.

Outlined below are the various issuances and related materials from the BSP on the implementation of the capital standards in the Philippines:

Implementing Guidelines

For U/KBs, and their subsidiary banks and quasi-banks

For stand-alone TBs, RBs and Coop Banks

For stand-alone QBs

Other Related Issuances

• Circulars
• Memoranda
• Circular Letters

Reporting Templates

News Releases

Speeches

Presentations

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1 The Basel Committee on Banking Supervision has issued the said capital standards in 26 June 2004. The comprehensive version of the capital standards dated June 2006, including the recent enhancements to the framework can be accessed at www.bis.org.