Introduction
Debt watcher Moody’s Investors Service is now reviewing for upgrade the local and foreign currency deposit ratings of four Philippine banks after announcing the same decision on the country’s credit rating.
These banks are the Sy-led Banco de Oro Unibank (BDO), Ayala-led Bank of the Philippine Island (BPI), government financial institution Land Bank of the Philippines (Landbank) and Ty-led Metropolitan Bank & Trust Company (Metrobank).
These banks local and foreign currency deposits are rated ‘Ba1/Not Prime’.
Also under review is BDO’s foreign currency senior unsecured debt rating of ‘Ba1’ and Metrobank’s local currency subordinated debt rating of ‘Ba2’. “The bank financial strength ratings of the four banks remain unchanged,” Moody’s said in a statement.
It explained that “credit strength of the government is an important input in our assessment of the government's capacity to provide support in times of stress.”
"The review for upgrade of BDO's, BPI's, LBP's and MBT's ratings reflect our assessment that these ratings would likely benefit from an additional notch of systemic support uplift in the event that the parallel review of the Philippine sovereign debt rating concludes with a rating upgrade," Moody's Assistant Vice President and Lead Analyst for the Philippine banks Simon Chen said.
Aside from assessing the government’s ability to extend support, the debt watcher said the current evaluation “will also take into account the systemic importance of each bank, which would influence the government's willingness to extend support in times of stress.”
Among the factors that Moody’s will take into consideration in checking on the systemic importance of each of the banks are the bank's market share of system deposits and loans, and the financial institutions’ role in the country's payment system.
The statement cited that “the government's