FSCC to map PHL banks’ corporate links in 2026 to flag systemic risks

THE FINANCIAL STABILITY Coordination Council (FSCC) plans to map out banks’ connections with major companies next year as it sharpens its monitoring of emerging risks in the Philippine financial system.

In a statement at the weekend, the council said it would develop a unified protocol for coordinated response among the Bangko Sentral ng Pilipinas, Department of Finance, Insurance Commission, Philippine Deposit Insurance Corp. and Securities and Exchange Commission. The framework will guide how regulators detect, assess and address vulnerabilities across institutions.

“The FSCC’s top priority is to stay ahead of emerging risks and respond as one cohesive front,” FSCC Chairman and BSP Governor Eli M. Remolona, Jr. said at a meeting held on Nov. 5. “By improving system-wide monitoring and coordination, the FSCC aims to safeguard the stability of the Philippine financial system.”

The council noted that banks’ links to nonfinancial corporations have deepened in recent years. It said risks tied to these interconnections are increasingly shaped by housing market trends and leverage in both corporate and household sectors.

Earlier this year, Moody’s Ratings flagged that Philippine banks’ ownership ties with large conglomerates boost credit profiles but also introduce concentration and contagion risks, especially during periods of stress.

Still, the FSCC said the domestic banking industry remains well-positioned, citing strong capital buffers, solid liquidity and adequate loan-loss provisioning. Capital ratios have stayed above regulatory thresholds despite financial shocks, it added.

The council also said it is advancing capital market reforms. Part of this effort includes setting a standardized pricing convention for peso bonds and refining open-market operations to improve market efficiency, the BSP said. — K.K. Chan