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BSP assures bank stability amid Wirecard mess

Bangko Sentral ng Pilipinas Governor Benjamin Diokno on Thursday assured the safety and soundness of the banking system amid uncertainties brought about by the health crisis and the Wirecard controversy.

“The adoption of global standards such as the Basel III framework and measures to promote good corporate governance and effective risk management systems has prepared banks for these challenging times,” Diokno said in an online briefing.

“The robust BSP surveillance of emerging threats in the industry is also a product of its strong partnerships with peer regulators both within and outside the country, other government institutions, and industry associations,” he said.

He said recent issues faced by the banking system—including the Wirecard controversy—amid the pandemic highlighted the banking industry’s resilience.  He said governance and risk management reforms served as lines of defense for banks to ensure that threats to the integrity of the financial system are promptly addressed.

Diokno said the adoption of risk-based supervision allowed the BSP to effectively monitor compliance with standards and focus on areas that pose the most significant risk to the safety of individual banks and the soundness of the banking system as a whole.

When asked if there would be any reputational impact of the Wirecard controversy to the country, Diokno said he did not see any.

“The Wirecard issue does not pose reputational impact on the Philippines... even on investor sentiments. The market movements are attributable to the global pandemic,” Diokno said.

He said that there was no proof on the allegations that the missing $2.1 billion funds of Wirecard entered the country. “So far, our initial investigation does not show the fund entering the Philippines,” he said. 

Meanwhile, Diokno said the unwinding of COVID-19 relief measures would be data-driven, done gradually and prudently and communicated properly to all stakeholders.

Diokno said the timing would be critical to the exit strategy, and this would be determined by the data that would be gathered on inflation, capital and liquidity of banks and the financial system, which are essential to the decision-making process. Julito G. Rada

The BSP working paper, “Exit Strategies: How Do We Proceed?”, said the exit entails a reversion to policies that are consistent with the long-run economic growth path.

The paper said the process should neither cause premature withdrawal of support nor give rise to delays in necessary structural economic reforms.

Topics: Bangko Sentral ng Pilipinas , BSP Governor Benjamin Diokno , Wirecard
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