The Central Bank of the Philippines has approved a reform that allows banks to hold a Positive Neutral Countercyclical Capital Buffer, a releasable capital buffer that can be built up in periods of strong credit growth and drawn down in times of stress to sustain lending. The measure applies to universal and commercial banks, their subsidiaries and quasi-banks, and digital banks, and it does not increase overall capital requirements. Instead, the reform reallocates part of banks' existing Common Equity Tier 1 capital into a releasable buffer. Of the current minimum Common Equity Tier 1 requirement of 6 percent of risk-weighted assets, 1.5 percent will be designated as the Positive Neutral Countercyclical Capital Buffer, leaving a 4.5 percent minimum Common Equity Tier 1 requirement in line with Basel III. The minimum Tier 1 ratio and the capital adequacy ratio remain unchanged. The central bank said the banking system's Common Equity Tier 1 ratio stood at 15.06 percent at end-December 2025. Implementation will be phased. Universal and commercial banks, their subsidiaries and quasi-banks will have one year from effectivity to comply, while digital banks will have two years.
Central Bank of the Philippines2026-05-22
Central Bank of the Philippines approves releasable countercyclical capital buffer for banks with 1.5 percent CET1 allocation
The Central Bank of the Philippines approved a reform allowing banks to hold a Positive Neutral Countercyclical Capital Buffer, reallocating part of existing Common Equity Tier 1 capital into a releasable buffer to support lending during stress without increasing capital requirements. Of the 6 percent minimum Common Equity Tier 1 requirement, 1.5 percent will be designated as the buffer, leaving a 4.5 percent minimum in line with Basel III, with phased implementation for universal, commercial and digital banks.