Complexity equals stringency

For rural banks that have diversified their revenue streams and have thus pegged themselves as a “complex” sort, the Bangko Sentral ng Pilipinas (BSP) has decided that some corporate screw-tightening is warranted.

This is a fair price to pay. After all, as rural banks evolve from simply engaging in basic deposit taking and lending activities to more complex ones such as large-scale remittance and cross-selling activities, their potential earnings grow, but so do the potential accompanying risks.