Bank’s access to SDAs curbed by Philippine government

Total cuts now more than 200 basis points since July 2012.

The Bangko Sentral ng Pilipinas, the central bank, has narrowed banks' access to short-term special deposit accounts (SDAs) in another move to tweak a liquidity facility that has attracted a high volume of funds and contributed to financial strains on the govrnment.

The central bank has lowered the SDA rate thrice this year with the total cuts at more than 200 basis points since July 2012.

BSP now allows banks to access the SDA facility only for fund management products of its trust department. With the new rule, a bank’s other fiduciary business such as agency accounts and investment management products can no longer access SDAs.

For pooled funds, only unit investment trust funds offered by banks will be allowed to make SDA placements. The central bank said it will give banks until Nov. 30 to adjust their SDA placements and fully comply with the new rules.

It will impose administrative sanctions or file criminal charges against those non-compliant lenders.

SDA volume, however, has not fallen substantially despite the rate reductions. Total placements at US46.9 billion as of April 26 were just a tad lower than the record US48.1 billion posted last month.