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Building Banking Supervision Capacity in the Philippines: Interview with Ms. Imelda Singzon, Philippines Deposit Insurance Corporation

Between 2011 and 2013, FIRST provided technical support to Philippines Deposit Insurance Company (PDIC) through 2 projects, Reserves Targeting and Financial Modeling for Deposit Insurance, which were implemented by the World Bank Group. These systems are essential to effective supervision, and the backbone of a stable, national banking system. The FIRST Initiative and World Bank team provided technical assistance to build the PDIC’s analytical capacity to predict bank performance through stress testing and failure prediction modeling.

These tools have helped the PDIC to better analyze risks faced by systemically important financial institutions (SIFIs), and how the PDIC’s performing contributes to the national banking sector’s stability.

Last year, Ms. Imelda Singzon, Executive Vice President, Examination and Resolution Sector, Philippines Deposit Insurance Corporation discussed the impact of FIRST’s technical assistance, and shared some of the PDIC’s recent progress in implementing the revised target funding ratio.

Q1: What challenges did the Reserves Targeting and Financial Modeling for Deposit Insurance projects hope to address?

Prior to 2011, when the first TA was granted by FIRST, we were actually doing a methodology backed by way of a target fund size. It was an absolute number. I recall it was 90 billion. 

 I recall during that time, it was after the FSAP meeting that we decided actually to approach World Bank/ FIRST for our first TA. So the Target Fund Ratio project was born in 2011, and the recommended target fund ratio is 5%. So, from 2011 up to today, we continue to use the target fund ratio of 5%. 

Now we have another project which was funded by FIRST in 2013, we call this the Financial Modeling project for Deposit Insurance Systems. It has two sub-projects. The first sub-project is what we call the Bank Failure Prediction Model. This is for predicting small bank failures. And the other one is the stress test model, which actually is the model designed for the bigger banks.

We are thankful that FIRST actually granted the request and now we are able to use this model, the Bank Failure prediction model. The two projects are actually reinforcing. I would like to say that they are very functional. They have led to a capacity building benefits for the institution, in terms of the planning process, in terms of resource deployment strategies, and also in the area of risk management. 

So all of these things are inter-related in a way. And not only one department is benefitting. There is one department which actually oversees and keeps the model updated every time. But its utilization is actually for everyone; those involved in resolution, those involved in examination of banks. 

Q2: What was your experience with FIRST?

Our experience with FIRST was very cordial. For instance, in the case of the Bank Failure Prediction Model, between the time of completion and time of implementation, we were already doing a lot of things, so that we may be able to utilize the product of the project. 

As I was telling the group yesterday, FIRST was so very kind and World Bank actually to allow such an arrangement. That we can actually call on the consultants actually to continue to provide guidance to us in the course of that implementation. I think it was really great and we are very thankful.