MANILA — The Bangko Sentral ng Pilipinas (BSP) has introduced a policy allowing universal and commercial banks to set aside funds for lending during periods of financial stress through the Positive Neutral Countercyclical Capital Buffer (PN-CCyB).

Under BSP Circular No. 1235, series of 2026, universal and commercial banks (U/KBs), along with their subsidiaries and quasi-banks, will be given one year to comply with the new requirement, while digital banks will have two years.

The BSP said the policy allows banks to build up capital during periods of strong credit growth and draw from it during economic downturns to sustain lending to households and businesses.

“The reform will strengthen the country’s financial stability as it enables banks to set aside capital that can be released in bad times to keep credit flowing to households and firms,” BSP Governor Eli Remolona Jr. said.

The central bank clarified that the measure will not increase overall capital requirements but will instead reallocate part of banks’ Common Equity Tier 1 (CET1) capital into a releasable buffer.

Prior to the new framework, banks were required to maintain CET1 equivalent to at least 6 percent of risk-weighted assets.

“With the PN-CCyB, 1.5 percent of CET1 will be designated as a releasable buffer, leaving a minimum CET1 requirement of 4.5 percent of RWA — consistent with Basel III standards that aim to make banks more resilient. All other capital requirements, including the minimum Tier 1 ratio and the Capital Adequacy Ratio, remain unchanged,” Remolona said.

He added that the Philippines now joins other countries that have adopted similar buffers to improve financial resilience and respond more quickly to economic shocks without increasing the overall capital burden on banks.