The Bangko Sentral ng Pilipinas (BSP) has approved a new rule (Circular No. 1235) establishing the Positive Neutral Countercyclical Capital Buffer (PN-CCyB), a mechanism designed to support steady lending even during economic stress.
Under this reform, covered institutions — universal and commercial banks, their subsidiaries, quasi-banks, and digital banks — will set aside 1.5 percent of their existing high-quality capital (Common Equity Tier 1) as a special reserve. This buffer is built when credit growth is strong and can be tapped during downturns to keep loans flowing to households and businesses. It does not raise total capital requirements; the minimum required CET1 is simply adjusted from 6 percent to 4.5 percent of risk-weighted assets, aligned with global Basel III standards. All other capital rules stay the same.
The policy strengthens financial stability by ensuring banks have extra capacity to absorb shocks without additional regulatory burden. The Philippine banking system is well-prepared, with a CET1 ratio of 15.06 percent as of end-2025, far above required levels. Implementation will be phased: traditional banks get one year to comply, while digital banks have two years.
