This measure has the intended effect of boosting a bank's capital adequacy ratios. As detailed in previous blog posts concerning the capital adequacy of Philippine banks, capital adequacy ratios are generally defined as:
Capital Adequacy Ratio = (Regulatory Capital/Risk Weighted Assets)Since dollar denominated ROPs are now deemed "safer" by virtue of the Philippine's upgraded sovereign rating, regulators have assigned a lower risk weight to those bonds and therefore require less backing by equity. The lower the risk weight assigned to ROPs will encourage banks to invest in even more ROPs because those assets are now deemed safe by bank regulators such as the BSP.
But are assets such as ROPs really safer? For one, they expose the bank to increased foreign exchange risk, especially as the Philippine Peso continues its medium term appreciation against the dollar. As the Philippine Peso appreciates against the dollar, the bank can buy more dollar assets with fewer pesos. Therefore, dollar denominated assets will become even cheaper. This is not hypothetical. It is happening as we speak.
From 2005 to 2013, the Philippine Peso Dollar Exchange Rate dropped from a high of Php 56.04 to the dollar as of 2005 to just Php 42.23 to the dollar as of 2013, a drop of almost 25%. The country's upgraded sovereign ratings are bound to attract more dollar inflows into the country in the form of Foreign Direct Investments (FDIs) and Portfolio Inflows. The continued growth in OFW Remittances will also lead to a further appreciation of the Philippine Peso.
The continued appreciation of the Philippine Peso against the dollar will cheapen the value of dollar based assets and lead to losses in a bank's ROP holdings and, possibly, capital.
Basel III Leverage Ratio
Basel III rules also proposed a minimum level for equity relative to total assets. Under Basel III rules, this leverage ratio is set to a minimum of just 3 percent. Critics have said this number is outrageously low because it is too easy for a business to experience a 3 percent to 5 percent decline in assets during a typical economic downturn. Setting the bar so low, they say, will lead to even more bank failures and taxpayer bailouts. Academics have called for a tripling of this ratio to at least 10 percent, to increase the financial stability of the banking system.
Given these requirements, at least three banks will not be able to meet the proposed Basel III minimum of 3 percent as of December 2013. These are as follows:
- Deutsche Bank (Leverage Ratio of 2.75%)
- Citibank, N.A. (Leverage Ratio of 2.77%)
- Bank of America N.A. (Leverage Ratio of 2.80%)
By setting the the minimum leverage ratio to 10 percent, twenty-eight more banks will not be able to meet this requirement:
- HongKong & Shanghai Banking Corporation (Leverage Ratio of 3.01%)
- JP Morgan Chase Bank National Association (Leverage Ratio of 3.81%)
- ANZ Banking Group Ltd (Leverage Ratio of 3.84%)
- Mizuho Bank Ltd - Manila Branch (Leverage Ratio of 3.99%)
- The Bank of Tokyo-Mitsubishi UFJ Ltd (Leverage Ratio of 4.23%)
- Standard Chartered Bank (Leverage Ratio of 4.38%)
- Planters Development Bank (Leverage Ratio of 5.16%)
- Korea Exchange Bank (Leverage Ratio of 5.76%)
- Sterling Bank of Asia Inc. (Leverage Ratio of 6.15%)
- China Bank Savings Inc. (Leverage Ratio of 6.77%)
- Wealth Development Bank Corporation (Leverage Ratio of 6.97%)
- United Coconut Planters Bank (Leverage Ratio of 7.14%)
- Bank of China Limited - Manila Branch (Leverage Ratio of 7.45%)
- Philippine Bank of Communications (Leverage Ratio of 7.53%)
- Mega International Commercial Bank Co Ltd. (Leverage Ratio of 7.54%)
- The Palawan Bank Inc. (Leverage Ratio of 7.77%)
- Internationale Nederlanden Groep Bank (Leverage Ratio of 7.85%)
- Equicom Savings Bank Inc. (Leverage Ratio of 7.85%)
- BPI Family Savings Bank Inc. (Leverage Ratio of 8.14%)
- BPI Direct Savings Bank Inc (Leverage Ratio of 8.37%)
- Land Bank of the Philippines (Leverage Ratio of 8.59%)
- Allied Savings Bank (Leverage Ratio of 8.82%)
- Philippine Postal Savings Bank Inc. (Leverage Ratio of 9.08%)
- Development Bank of the Philippines (Leverage Ratio of 9.34%)
- The Real Bank Inc. (Leverage Ratio of 9.53%)
- Enterprise Bank Inc. (Leverage Ratio of 9.74%)
- BPI Globe Banko (Leverage Ratio of 9.82%)
- HSBC Savings Bank (Phils) Inc. (Leverage Ratio of 9.98%)
Here's a complete list below:
| Philippine Banking System | |||||
| Leverage Ratio | |||||
| December 31, 2013 | |||||
| In Php | |||||
| Bank | Type of Bank | Tier One CAR | Stockholder's Equity | Total Assets | Leverage Ratio |
| DEUTSCHE BANK AG | U/KB | 30.11 | 2,038,174,079.87 | 74,214,652,906.05 | 2.75% |
| CITIBANK, N.A. | U/KB | 19.79 | 7,545,425,770.57 | 272,163,431,213.25 | 2.77% |
| BANK OF AMERICA N.A. | U/KB | 56.09 | 596,946,705.20 | 21,298,895,740.76 | 2.80% |
| HONGKONG & SHANGHAI BANKING CORPORATION | U/KB | 15.45 | 5,856,722,324.95 | 194,684,954,066.14 | 3.01% |
| JP MORGAN CHASE BANK NATIONAL ASSOCIATION | U/KB | 56.55 | 1,556,917,580.74 | 40,862,867,323.12 | 3.81% |
| ANZ BANKING GROUP LTD | U/KB | 15.07 | 2,312,184,822.81 | 60,268,878,128.13 | 3.84% |
| MIZUHO BANK LTD - MANILA BRANCH | U/KB | 25.49 | 1,319,435,712.15 | 33,075,587,406.69 | 3.99% |
| THE BANK OF TOKYO-MITSUBISHI UFJ LTD | U/KB | 22.63 | 2,284,664,024.91 | 53,964,684,850.83 | 4.23% |
| STANDARD CHARTERED BANK | U/KB | 12.32 | 3,310,605,442.92 | 75,545,876,916.72 | 4.38% |
| PLANTERS DEVELOPMENT BANK | Thrift | 3.02 | 2,709,190,353.46 | 52,503,279,053.97 | 5.16% |
| KOREA EXCHANGE BANK | U/KB | 29.81 | 618,026,086.10 | 10,732,391,289.96 | 5.76% |
| STERLING BANK OF ASIA INC (A SAVINGS BANK) | Thrift | 9.86 | 1,617,042,495.35 | 26,306,521,089.55 | 6.15% |
| CHINA BANK SAVINGS INC | Thrift | 8.47 | 1,048,818,111.09 | 15,495,203,303.04 | 6.77% |
| WEALTH DEVELOPMENT BANK CORPORATION | Thrift | 13.09 | 363,668,842.05 | 5,218,187,289.19 | 6.97% |
| UNITED COCONUT PLANTERS BANK | U/KB | 10.26 | 18,923,327,348.00 | 265,212,700,969.26 | 7.14% |
| BANK OF CHINA LIMITED-MANILA BRANCH | U/KB | 24.38 | 746,794,923.86 | 10,020,010,083.29 | 7.45% |
| PHIL BANK OF COMMUNICATIONS | U/KB | 11.83 | 4,884,526,700.64 | 64,880,131,571.78 | 7.53% |
| MEGA INTERNATIONAL COMMERCIAL BANK CO LTD | U/KB | 32.98 | 757,011,827.28 | 10,042,902,285.31 | 7.54% |
| THE PALAWAN BANK (PALAWAN DB) INC | Thrift | 5.57 | 26,205,515.71 | 337,456,689.88 | 7.77% |
| INTERNATIONALE NEDERLANDEN GROEP BK | U/KB | 40.19 | 3,132,011,905.89 | 39,910,565,005.06 | 7.85% |
| EQUICOM SAVINGS BANK INC | Thrift | 0.00 | 498,166,589.96 | 6,342,813,241.89 | 7.85% |
| BPI FAMILY SAVINGS BANK INC | Thrift | 13.23 | 17,631,547,816.22 | 216,669,278,454.84 | 8.14% |
| BPI DIRECT SAVINGS BANK INC | Thrift | 17.38 | 972,616,889.68 | 11,614,273,687.82 | 8.37% |
| LAND BANK OF THE PHILIPPINES | U/KB | 13.98 | 72,317,804,694.85 | 841,852,855,245.16 | 8.59% |
| ALLIED SAVINGS BANK | Thrift | 25.19 | 966,841,559.87 | 10,967,258,502.52 | 8.82% |
| PHILIPPINE POSTAL SAVINGS BANK INC | Thrift | 11.59 | 655,747,468.09 | 7,218,444,717.15 | 9.08% |
| DEVELOPMENT BANK OF THE PHILIPPINES | U/KB | 16.75 | 40,750,998,289.34 | 436,426,249,862.13 | 9.34% |
| THE REAL BANK (A THRIFT BANK) INC | Thrift | 5.43 | 806,215,196.88 | 8,456,827,409.73 | 9.53% |
| ENTERPRISE BANK INC (A THRIFT BANK) | Thrift | 0.00 | 206,730,309.57 | 2,123,253,372.47 | 9.74% |
| BPI GLOBE BANKO INC A SAVINGS BANK | Thrift | 14.76 | 222,466,942.65 | 2,265,778,587.87 | 9.82% |
| HSBC SAVINGS BANK (PHILS) INC | Thrift | 30.62 | 2,825,066,001.29 | 28,302,818,313.58 | 9.98% |
| BDO UNIBANK INC | U/KB | 13.22 | 163,633,762,916.89 | 1,629,852,640,147.34 | 10.04% |
| BANK OF THE PHILIPPINE ISLANDS | U/KB | 12.15 | 99,164,800,917.73 | 965,619,575,199.67 | 10.27% |
| RCBC SAVINGS BANK INC | Thrift | 15.96 | 6,899,395,315.46 | 66,886,181,220.24 | 10.32% |
| WORLD PARTNERS BANK (A THRIFT BANK) | Thrift | 15.22 | 97,350,763.11 | 925,078,269.01 | 10.52% |
| CITY SAVINGS BANK INC | Thrift | 10.42 | 3,155,445,882.46 | 29,956,746,061.62 | 10.53% |
| CHINA BANKING CORPORATION | U/KB | 14.79 | 41,787,498,261.93 | 396,058,016,978.86 | 10.55% |
| SECURITY BANK SAVINGS CORPORATION | Thrift | 11.17 | 1,063,659,584.16 | 10,018,155,817.85 | 10.62% |
| PENBANK INC (A PDB) (FORMERLY: PENINSULA RB INC) | Thrift | 15.70 | 242,349,904.07 | 2,199,243,201.14 | 11.02% |
| UNION BANK OF THE PHILIPPINES | U/KB | 18.79 | 40,738,622,254.61 | 364,232,630,707.94 | 11.18% |
| PHILIPPINE VETERANS BANK | U/KB | 20.18 | 6,209,367,453.06 | 55,397,258,009.99 | 11.21% |
| METROPOLITAN BANK & TRUST CO | U/KB | 13.11 | 130,413,414,436.45 | 1,132,034,652,714.64 | 11.52% |
| BANK OF COMMERCE | U/KB | 22.75 | 13,817,646,787.11 | 118,110,965,430.80 | 11.70% |
| PHILIPPINE SAVINGS BANK | Thrift | 13.81 | 15,121,817,848.77 | 128,875,485,446.47 | 11.73% |
| ROBINSONS BANK CORPORATION | U/KB | 22.69 | 5,172,343,787.97 | 43,265,780,829.76 | 11.95% |
| SECURITY BANK CORPORATION | U/KB | 14.37 | 40,658,066,501.58 | 339,939,872,201.80 | 11.96% |
| OPPORTUNITY KAUSWAGAN BANK INC (A MICROFINANCE THRIFT BANK) | Thrift | 43.63 | 61,638,110.53 | 515,334,163.82 | 11.96% |
| HIYAS BANKING CORPORATION | Thrift | 17.10 | 161,385,481.39 | 1,317,967,796.34 | 12.25% |
| RIZAL COMMERCIAL BANKING CORP | U/KB | 15.10 | 45,974,823,788.29 | 366,451,937,446.26 | 12.55% |
| LUZON DEVELOPMENT BANK | Thrift | 15.03 | 481,131,559.05 | 3,645,815,026.70 | 13.20% |
| PHILIPPINE NATIONAL BANK | U/KB | 15.37 | 75,851,044,114.67 | 573,238,142,360.19 | 13.23% |
| COMSAVINGS BANK | Thrift | 14.91 | 230,763,397.64 | 1,742,425,212.41 | 13.24% |
| PRODUCERS SAVINGS BANK CORPORATION | Thrift | 18.07 | 1,182,102,090.12 | 8,908,232,739.41 | 13.27% |
| EAST WEST BANKING CORP | U/KB | 13.83 | 19,118,256,899.86 | 140,253,643,927.45 | 13.63% |
| MAYBANK PHILIPPINES INC | U/KB | 19.52 | 10,219,650,372.27 | 73,792,170,989.42 | 13.85% |
| BANGKOK BANK PUBLIC CO LTD | U/KB | 87.79 | 1,170,854,993.88 | 7,974,314,412.68 | 14.68% |
| PHILIPPINE BUSINESS BANK INC A SAVINGS | Thrift | 23.58 | 7,110,533,709.94 | 48,072,915,514.00 | 14.79% |
| BDO PRIVATE BANK, INC. | U/KB | 37.57 | 6,182,595,239.49 | 40,317,361,546.39 | 15.33% |
| MALAYAN BANK SAVINGS AND MORT BANK INC | Thrift | 20.77 | 1,097,017,961.88 | 7,061,316,921.73 | 15.54% |
| VILLAGE BANK INC (A THRIFT BANK) | Thrift | 16.76 | 74,607,045.44 | 473,491,618.80 | 15.76% |
| 1ST VALLEY BANK INC A DEVELOPMENT BANK | Thrift | 0.00 | 1,024,055,944.77 | 6,264,553,894.95 | 16.35% |
| CITIBANK SAVINGS INC | Thrift | 15.76 | 1,588,734,573.60 | 9,695,392,116.14 | 16.39% |
| PHILIPPINE RESOURCES SAVINGS BANKING | Thrift | 14.70 | 1,600,287,621.08 | 9,689,627,536.29 | 16.52% |
| PHILIPPINE TRUST COMPANY | U/KB | 35.53 | 20,441,716,930.88 | 121,281,545,645.20 | 16.85% |
| ASIA UNITED BANK CORPORATION | U/KB | 18.15 | 18,014,404,268.37 | 105,070,308,550.26 | 17.15% |
| DUMAGUETE CITY DEVELOPMENT BANK INC | Thrift | 23.39 | 216,227,266.65 | 1,220,883,864.05 | 17.71% |
| FARMERS SAVINGS & LOAN BANK INC | Thrift | 17.03 | 114,015,222.56 | 640,248,499.38 | 17.81% |
| BATAAN DEVELOPMENT BANK | Thrift | 19.61 | 68,240,142.11 | 345,728,091.19 | 19.74% |
| FIRST CONSOLIDATED BANK INC (A PDB) | Thrift | 23.09 | 2,189,760,426.95 | 10,499,857,685.52 | 20.86% |
| CITYSTATE SAVINGS BANK INC | Thrift | 31.10 | 771,935,670.79 | 3,601,119,911.50 | 21.44% |
| NORTHPOINT DEV'T BANK INC | Thrift | 19.23 | 74,030,797.44 | 329,273,963.59 | 22.48% |
| UCPB SAVINGS BANK | Thrift | 24.87 | 2,645,570,961.14 | 11,732,985,528.07 | 22.55% |
| CTBC BANK (PHILIPPINES) CORPORATION | U/KB | 25.23 | 6,359,806,854.09 | 28,044,833,934.33 | 22.68% |
| CARD SME BANK INC A THRIFT BANK | Thrift | 264.25 | 274,434,454.71 | 1,138,619,582.27 | 24.10% |
| LIFE SAVINGS BANK INC | Thrift | 64.98 | 66,553,066.52 | 264,988,322.46 | 25.12% |
| METRO CEBU PUBLIC SAVINGS BANK | Thrift | 26.73 | 63,038,890.96 | 235,683,203.20 | 26.75% |
| BATAAN SAVINGS AND LOAN BANK | Thrift | 0.00 | 71,501,666.95 | 265,631,633.30 | 26.92% |
| SUN SAVINGS BANK INC | Thrift | 45.66 | 104,623,612.45 | 387,296,756.96 | 27.01% |
| CORDILLERA SAVINGS BANK INC | Thrift | 32.20 | 103,395,121.60 | 366,379,075.97 | 28.22% |
| BUSINESS AND CONSUMERS BANK (A DB) | Thrift | 0.00 | 80,500,827.25 | 264,552,919.40 | 30.43% |
| INTER-ASIA DEVELOPMENT BANK | Thrift | 0.00 | 52,276,134.45 | 166,741,479.31 | 31.35% |
| LEMERY SAVINGS & LOAN BANK, INC. | Thrift | 32.59 | 68,914,048.64 | 206,497,218.12 | 33.37% |
| UNIVERSITY SAVINGS BANK INC | Thrift | 50.81 | 213,776,498.41 | 637,163,163.52 | 33.55% |
| MARITIME SAVINGS BANK CORPORATION | Thrift | 0.00 | 67,829,316.54 | 189,908,799.18 | 35.72% |
| TONG YANG SAVINGS BANK INC | Thrift | 46.38 | 390,716,494.64 | 1,087,744,632.58 | 35.92% |
| QUEEN CITY DEVELOPMENT BANK INC OR QUEENBANK A THRIFT BANK | Thrift | 50.03 | 656,548,271.48 | 1,689,703,626.28 | 38.86% |
| PAMPANGA DEVELOPMENT BANK | Thrift | 116.10 | 117,192,461.70 | 298,445,823.43 | 39.27% |
| MICROFINANCE MAXIMUM SB INC | Thrift | 42.65 | 45,791,031.87 | 111,392,173.10 | 41.11% |
| BANK ONE SAVINGS AND TRUST CORP. | Thrift | 71.47 | 542,290,082.23 | 1,316,418,205.93 | 41.19% |
| UNITED OVERSEAS BANK PHILIPPINES | Thrift | 137.02 | 700,169,994.52 | 1,672,721,520.15 | 41.86% |
| PACIFIC ACE SAVINGS BANK INC | Thrift | 51.79 | 75,606,367.84 | 176,267,986.18 | 42.89% |
| OPTIMUM DEVELOPMENT BANK INC | Thrift | 0.00 | 713,108,078.00 | 1,640,989,224.73 | 43.46% |
| MALASIQUI PROGRESSIVE SLB, INC | Thrift | 45.80 | 54,034,929.02 | 116,699,139.87 | 46.30% |
| TOWER DEVELOPMENT BANK | Thrift | 110.08 | 112,560,495.06 | 234,526,741.66 | 47.99% |
| DUNGGANON BANK (A MICROFINANCE THRIFT | Thrift | 49.61 | 84,914,347.98 | 147,224,952.75 | 57.68% |
| QUEZON COCONUT BANK INC (A THRIFT BANK) | Thrift | 58.83 | 58,839,248.19 | 101,881,184.62 | 57.75% |
| AL-AMANAH ISLAMIC INVESTMENT BANK OF THE PHILS | U/KB | 132.08 | 392,277,101.62 | 678,514,389.01 | 57.81% |
| PROGRESS SAVINGS AND LOAN BANK INC | Thrift | 58.76 | 83,008,094.43 | 139,951,494.60 | 59.31% |
| PRIDE STAR DEVELOPMENT BANK INC | Thrift | 68.06 | 69,890,199.26 | 115,298,962.30 | 60.62% |
| ISLA BANK (A THRIFT BANK) INC | Thrift | 235.60 | 648,121,453.33 | 1,067,267,523.59 | 60.73% |
| MERCHANTS SAVINGS & LOAN ASSOCIATION INC | Thrift | 69.59 | 488,242,200.45 | 802,706,719.05 | 60.82% |
| SAMPAGUITA SAVINGS BANK INC | Thrift | 60.09 | 56,674,898.04 | 85,206,018.05 | 66.52% |
| MBANK PHILIPPINES | Thrift | 79.24 | 125,138,767.06 | 158,760,908.29 | 78.82% |
| CENTURY SAVINGS BANK CORPORATION | Thrift | 89.51 | 911,497,011.92 | 1,126,045,152.51 | 80.95% |
| BDO ELITE SAVINGS BANK INC | Thrift | 527.45 | 1,592,542,542.62 | 1,595,912,515.12 | 99.79% |
| Grand Total | 1,000,788,644,101.93 | 9,783,019,880,757.83 | 10.23% | ||
The Philippine Banking System, as a whole, has a Leverage Ratio of 10.23% as of December 31, 2013. However, this ratio does not factor in banks with overstated capital. Once this is accounted for, the problem becomes even more acute for certain banks like:
- Planters Development Bank (Adjusted Leverage Ratio of 1.86%)
- United Coconut Planters Bank (Adjusted Leverage Ratio of 3.56%)
- Wealth Development Bank Corporation (Adjusted Leverage Ratio of 6.90%)
| Philippine Banking System | |||||||||
| Leverage Ratios of Banks with Overstated Capital | |||||||||
| December 31, 2013 | |||||||||
| In Php | |||||||||
| Bank | Type of Bank | Tier One CAR | Stockholder's Equity | Unbooked Losses | Adjusted SE | Total Assets | Unbooked Losses | Adjusted Total Assets | Adj. Leverage Ratio |
| PLANTERS DEVELOPMENT BANK | Thrift | 3.02 | 2,709,190,353.46 | 1,766,318,678.15 | 942,871,675.31 | 52,503,279,053.97 | 1,766,318,678.15 | 50,736,960,375.82 | 1.86% |
| UNITED COCONUT PLANTERS BANK | U/KB | 10.26 | 18,923,327,348.00 | 9,841,900,553.53 | 9,081,426,794.47 | 265,212,700,969.26 | 9,841,900,553.53 | 255,370,800,415.73 | 3.56% |
| WEALTH DEVELOPMENT BANK CORPORATION | Thrift | 13.09 | 363,668,842.05 | 3,841,403.12 | 359,827,438.93 | 5,218,187,289.19 | 3,841,403.12 | 5,214,345,886.07 | 6.90% |
| BDO UNIBANK INC | U/KB | 13.22 | 163,633,762,916.89 | 141,704,503.03 | 163,492,058,413.86 | 1,629,852,640,147.34 | 141,704,503.03 | 1,629,710,935,644.31 | 10.03% |
| CITY SAVINGS BANK INC | Thrift | 10.42 | 3,155,445,882.46 | 77,957,177.94 | 3,077,488,704.52 | 29,956,746,061.62 | 77,957,177.94 | 29,878,788,883.68 | 10.30% |
| BANK OF COMMERCE | U/KB | 22.75 | 13,817,646,787.11 | 692,248,501.05 | 13,125,398,286.06 | 118,110,965,430.80 | 692,248,501.05 | 117,418,716,929.75 | 11.18% |
| CITIBANK SAVINGS INC | Thrift | 15.76 | 1,588,734,573.60 | 64,387,850.64 | 1,524,346,722.96 | 9,695,392,116.14 | 64,387,850.64 | 9,631,004,265.50 | 15.83% |
| BATAAN DEVELOPMENT BANK | Thrift | 19.61 | 68,240,142.11 | 12,083,877.40 | 56,156,264.71 | 345,728,091.19 | 12,083,877.40 | 333,644,213.79 | 16.83% |
| FARMERS SAVINGS & LOAN BANK INC | Thrift | 17.03 | 114,015,222.56 | 6,045.94 | 114,009,176.62 | 640,248,499.38 | 6,045.94 | 640,242,453.44 | 17.81% |
| CARD SME BANK INC A THRIFT BANK | Thrift | 264.25 | 274,434,454.71 | 5,081,135.45 | 269,353,319.26 | 1,138,619,582.27 | 5,081,135.45 | 1,133,538,446.82 | 23.76% |
| Grand Total | 204,648,466,522.95 | 12,605,529,726.25 | 192,042,936,796.70 | 2,112,674,507,241.16 | 12,605,529,726.25 | 2,100,068,977,514.91 | 9.14% | ||
A lot of the foreign banks figure prominently in the list of Philippine Banks with very low leverage ratios. Deutsche Bank AG, for instance, which has an impregnable Tier One CAR of 30.11 as of December 31, 2013 (BSP Minimum is 10), has a leverage ratio of only 2.75% - the lowest among all Philippine Banks. Citibank, N.A. fares no better with a leverage ratio of just 2.77%. The same goes for Bank of America N.A., with a leverage ratio of 2.80% - again below the Basel III minimum ratio of 3 percent. Most of the foreign banks with branches in the Philippines have leverage ratios below the suggested minimum of 10 percent.
Their parent companies are just as undercapitalized. Again, Deutsche Bank AG, the global bank, has a leverage ratio of only 2.68% as of December 31, 2013. Indeed, Deutsche Bank was cited by Thomas Hoenig, the Vice Chairman of the Federal Deposit Insurance Corporation (FDIC), as "horribly undercapitalized". All of these foreign banks can boast of regulatory capital levels way above the minimum. Both local Manila Branches and their parent companies have Tier One CARs of at least 9% or more. But given the next economic downturn, that fortress balance sheet will prove to be just a myth for most.
| Philippine Banking System | |||||||||
| Leverage Ratios of Foreign Banks | |||||||||
| December 31, 2013 | |||||||||
| In Currency Millions | |||||||||
| Local Manila Branch | Parent Company | ||||||||
| Date | Tier One CAR | Leverage Ratio | Currency | Date | Stockholder's Equity | Total Assets | Leverage Ratio | Tier 1 Capital | |
| DEUTSCHE BANK AG | 12/31/13 | 30.11 | 2.75% | EUR Million | 12/31/13 | 54,003.00 | 2,012,329.00 | 2.68% | 9.7 |
| MIZUHO BANK LTD - MANILA BRANCH | 12/31/13 | 25.49 | 3.99% | Yen Million | 09/30/13 | 5,929,823.00 | 177,411,062.00 | 3.34% | 11.59 |
| INTERNATIONALE NEDERLANDEN GROEP BK | 12/31/13 | 40.19 | 7.85% | EUR Million | 12/31/13 | 43,940.00 | 1,076,602.00 | 4.08% | 11.7 |
| THE BANK OF TOKYO-MITSUBISHI UFJ LTD | 12/31/13 | 22.63 | 4.23% | Yen Million | 12/31/13 | 12,629,201.00 | 258,441,754.00 | 4.89% | 12.11 |
| ANZ BANKING GROUP LTD | 12/31/13 | 15.07 | 3.84% | AUD $ Million | 12/31/13 | 45,615.00 | 702,991.00 | 6.49% | 9.9 |
| HONGKONG & SHANGHAI BANKING CORP | 12/31/13 | 15.45 | 3.01% | US$ Million | 12/31/13 | 181,871.00 | 2,671,318.00 | 6.81% | 13.6 |
| STANDARD CHARTERED BANK | 12/31/13 | 12.32 | 4.38% | US$ Million | 12/31/13 | 46,246,000.00 | 674,380,000.00 | 6.86% | 11.8 |
| BANK OF CHINA LIMITED-MANILA BRANCH | 12/31/13 | 24.38 | 7.45% | CNY Millions | 12/31/13 | 961,477,000.00 | 13,874,299,000.00 | 6.93% | 9.69 |
| JP MORGAN CHASE BANK NATIONAL ASSOCIATION. | 12/31/13 | 56.55 | 3.81% | US$ Million | 12/31/13 | 211,178.00 | 2,415,689.00 | 8.74% | 10.7 |
| CITIBANK, N.A. | 12/31/13 | 19.79 | 2.77% | US$ Million | 12/31/13 | 204,339.00 | 1,880,382.00 | 10.87% | 10.5 |
| BANK OF AMERICA N.A. | 12/31/13 | 56.09 | 2.80% | US$ Million | 12/31/13 | 232,685.00 | 2,102,273.00 | 11.07% | 12.44 |
| BANGKOK BANK PUBLIC CO LTD | 12/31/13 | 87.79 | 14.68% | Baht Thousands | 12/31/13 | 296,051.70 | 2,596,507.20 | 11.40% | 14.4 |
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