Philippines banking systems are ranked as having high risk factors according to a recent study by Standard & Poor (S&P.) The archipelago was classified among Group 7 nations, with Group 1 as those with the lowest risk levels while Group 10 has the highest risk levels.
(Photo Source: blog.vittana.org)
S&P Ratings Services’ released its Banking Industry Country Risk Assessment (BICRA), which assessed 86 banking systems worldwide according to a report in the philSTAR.com.
The Philippine banking system’s credit risk to its economy was ranked “very high” by the rating agency. Among the countries with “low risks” are Switzerland and Germany, while nations with “extremely high risk” include Belarus, Jamaica, Greece, Egypt, Cambodia and Vietnam.
The Philippines is classified with Latvia, Uruguay, Bulgaria, Iceland, Jordan, Morocco, Portugal, Indonesia, Ireland, Russia and El Salvador in Group 7. These countries banking systems have strong or high-risk impact on their respective economies.
BICRA is scored on a scale of 1 to 10, ranging from what S&P’s view as the lowest-risk banking systems (Group 1) to the highest-risk (Group 10). The BICRA methodology has two main analytical components: economic risk and industry risk.
A BICRA analysis for a country covers all of its financial institutions that take deposits, extend credit, or engage in both activities.
In addition, the analysis considers the relationship of the banking industry to the financial system, and furthermore to its sovereign. For that reason, many of the factors underlying a sovereign rating are important in determining a BICRA score.
“Our analysis of economic risk of a banking sector takes into account the structure and stability of the country’s economy, including the central government’s macroeconomic policy flexibility; actual or potential economic imbalances; and the credit risk of economic participants – mainly households and enterprises,” the report said.
A total of 84,873 depositors lost some P3 billion in savings as a result of the collapse of nine banks from January 1 to June 15 this year according to a report on INTERAKSYON.COM.
(Photo Source: wikimapia.org )
More than 320,000 depositors lost a total of P6 billion when LBC Bank was shut on 9 September 2011.
The nine lenders shut from January 1 to June 15 this year were Capitol City Rural Bank (Cavite) Inc., Rural Bank of Gainza (Camarines Sur) Inc., Rural Bank of Majayjay (Laguna) Inc., Rural Bank of Buenavista (Agusan del Norte) Inc., La Consolacion Rural Bank (Laguna) Inc., Rural Bank of Kinogitan (Misamis Oriental) Inc., Cooperative Rural Bank of Bulacan, Rural Bank of Naval (Leyte) Inc., and Rural Bank of Borongan (Eastern Samar) Inc.
In 2012, more than 120,000 depositors lost some P19.5 billion as a result of the collapse of 24 banks.
Planning on banking in the Philippines? Be very sure you thoroughly investigate and research the bank you plan to deal with. The bulk of our banking needs will remain in the United States.
While we do have a peso savings account with BDO and are very pleased with their customer service, we feel, from an economic and security standpoint, we should continue to keep the bulk of our assets in the States where our deposits are insured up to $250,000 per depositor if they're held in accounts that meet the FDIC-insurance rules at an FDIC-insured bank.
(Photo Source: www.pdic.gov.ph )
The maximum deposit insurance coverage provided by the Philippine Deposit Insurance Corp. (PDIC) to depositors is P500,000.