The Bangko Sentral ng Pilipinas (BSP) has approved regulatory relief measures allowing banks and quasi-banks to exclude certain unrealized losses on government securities from capital adequacy computations, as global financial markets continue to be affected by geopolitical tensions in the Middle East.
The policy, approved through Monetary Board Resolution Nos. 495 and 534 dated June 4 and June 18, 2026, covers net unrealized losses on peso-denominated government securities held under Fair Value Through Other Comprehensive Income (FVOCI) portfolios.
Under the guidelines, financial institutions will not be required to deduct cumulative unrealized losses incurred after the onset of the conflict when computing their Capital Adequacy Ratio (CAR) and Common Equity Tier 1 (CET1) ratio.
Banks that already recorded net unrealized losses as of February 28, 2026, may exclude additional losses beyond that baseline during the relief period. Institutions that had net unrealized gains as of the same date are allowed to disregard subsequent unrealized losses in CET1 calculations for the duration of the relief window.
The BSP clarified, however, that banks must continue to fully report actual unrealized FVOCI losses in financial statements and regulatory disclosures, including the Financial Reporting Package. Both realized and unrealized losses remain subject to full disclosure requirements.
Eligible institutions have until June 30, 2026, to notify the BSP if they intend to avail of the temporary capital relief.