PH to tighten monitoring of firms with conglomerate ties
A central bank-led government group tasked with shielding the financial system from market shocks will step up monitoring of banks and other firms with conglomerate ties next year, aiming to nip early signs of stress that could ripple through the country’s broader financial sector.
During its 43rd Executive Committee Meeting, members of the Financial Stability Coordination Council (FSCC) said a comprehensive mapping of corporate linkages in the Philippines would be a priority initiative for 2026.
The council noted that connections between nonfinancial corporations and the financial system have deepened in recent years, with risks shaped largely by housing market trends and high levels of debt in both corporate and household sectors.
To support this, the FSCC is also developing an “interagency coordinated response protocol” to address systemic risks.
“The FSCC’s top priority is to stay ahead of emerging risks and respond as one cohesive front,” said FSCC chair and Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr.
“By improving system-wide monitoring and coordination, the FSCC aims to safeguard the stability of the Philippine financial system,” Remolona added.
The FSCC also includes the Department of Finance, Insurance Commission, Philippine Deposit Insurance Corporation and Securities and Exchange Commission. It is the venue for financial market authorities to identify, monitor, manage and mitigate the buildup of systemic risks.
Already, institutions like the International Monetary Fund had said that while overall systemic financial risks remained moderate in the Philippines, the “strong bank interconnectedness with complex conglomerate structures” needed close monitoring.
Last June, Moody’s Ratings said that while conglomerate shareholders boosted the balance sheet and loan portfolio of banks via capital and lending opportunities, such a tight relationship also increased related-party risks.
Moody’s also noted the high dependence on banks funding in the absence of a deep capital market. This is seen to become a problem during economic downturns.
Overall, the FSCC said the banking sector remained resilient, backed by robust capital, healthy liquidity and ample allowance for credit losses.
Stress tests likewise indicated that postshock capital adequacy ratios stayed comfortably above regulatory thresholds.
Even so, the council said it would continue efforts to deepen the local capital market to reduce the country’s reliance on banks for funding. Measures include establishing a standardized bond-pricing convention and refining open market operations for greater efficiency.
