LOCAL UPDATE: August 26, 2012

Banking Industry in the Philippines is still resilient. BSP

BANK CLOSURE:
Bangko Sentral ng Pilipinas (BSP) stated that the banking industry in the Philippines is
going strong, stable and yet manageable, regardless of the awful events happened to some institutions like the Banco Filipino, LBC Bank and Export and Industry Banks were the three nationwide commercial banks that closed and the increasing number of applications received by the PDIC. The closures received much attention from government and media. BSP also put up highlights on Capital Adequacy Rate (CAR) of all the banks in the Philippines, which include both Universal and Commercial Banks. In that case, with the higher percent of CAR the bank will remain stable, even if the bank has its increasing bad debts because of the significant number of borrowers default on their loans. In my point of view, BSP and PDIC are sending the wrong possible message to the depositors like on their press release statement that the banking industry in the Philippines is still resilient and soundy. For me, both agencies are failed to show the public on how they can protect the depositor and now its no longer secret to me that many Filipinos are somewhat disappointed and still confused to put their savings in the bank because of the negative doubts running on their minds BSP should also act as a monitoring body and should never let a bank close because of mismanagement or bad practices. They should have set a parameter to control this in ahead of time to again - protect the depositors and not the capitalist or the stockholder because it will upset the businessmen, and the depositors with their securities. Just imagine, if the depositors lost their confidence to trust a bank, it may ruin the bank industry.

INTERNATIONAL UPDATE: August 28, 2012

The Eurozone crisis and how it affects the banking industry. The Eurozone was brought together through monetary union. Unfortunately the lack of fiscal union (common taxation, pensions etc.) makes the sharing of currency complicated. The countries of the Eurozone vary widely in culture and practices, sharing the same currency but not necessarily the same work ethic. Despite this, their monetary union made the countries highly interconnected and dependent on one another. So an economic breakdown was not necessarily surprising, and the domino effect throughout the Eurozone and those it trades with was inevitable. The global financial crisis occurred in part, as I understand it, because of poor banking practices that had become commonplace. In todays economy, every country is interconnected through trade and money lending. If one countrys economy is in crisis, it affects everyone. And this is why there is so much alarm surrounding Greeces failing economy. The EU is attempting to bail the government out, but this weeks elections mean a new Greek government, who may or may not accept the strict terms of the bailout agreement. If the worst comes to the worst, Greece may even have to leave the Eurozone. Germanys Angela Merkel has made it clear that the austerity measures put in place to help bail out Greece are non-negotiable, but well see what happens when the new government is elected.