June 27, 2014
BSP CIRCULAR NO. 839-14
SUBJECT : Real Estate Stress Test (REST) Limit for Real Estate Exposures
The Monetary Board in its Resolution No. 832 dated 22 May 2014, approved the adoption of a prudential real estate stress test (REST) limit for universal/commercial banks (U/KBs), thrift banks (TBs) on a solo and consolidated basis on their aggregate real estate exposures. The REST limit combines a macroprudential overlay of a severe stress test scenario, the principle of loss absorbency through minimum capital ratio thresholds and heightened supervisory response.
SECTION 1. Section 1397 of the Manual of Regulations for Banks shall be amended to include a real estate stress test (REST) limit for U/KBs, as follows:
"Section 1397. Limits on Real Estate Exposures and Other Real Estate Property of UBs/KBs. —
1. Real Estate Loan Limit. Total real estate loans of UB/KBs, excluding: . . ."
2. Real Estate Stress Test (REST) Limits. A prudential limit is set for real estate exposures, as defined under Memorandum No. M-2012-046 dated 21 September 2012, and other real estate property of UBs/KBs. Other real...
