Philippine banks will benefit from the adoption by the Bangko Sentral ng Pilipinas starting next year of the net stable funding rule, an additional measure that will strengthen lenders’ ability to withstand liquidity stress, debt watcher Moody’s Investors Service said Thursday.
Moody’s said in a statement the new NSFR rule would complement liquidity coverage ratio requirements and strengthen Philippine banks’ funding resilience, which would be credit positive. It said banks’ adherence to NSFR rules would limit their reliance on less stable funding sources and reduce their sensitivity to tightening market liquidity in times of stress.
The new rules are a key part of the Basel III regulatory framework and require banks to maintain more stable sources of funding for their on-and off-balance-sheet activities.
The NSFR standard seeks to limit excessive reliance on short-term funding by obliging banks to maintain a minimum level of long-term resources (so-called stable funding) against all bank activities. The NSFR’s objective is to promote bank liquidity.
