BANKS expect a new rating system to be implemented by the central bank next year that will assess their business models as forward-looking.“We are currently implementing a parallel run of the new supervisory assessment framework, or we call it for short ‘SAFr’ which will eventually replace the Camels rating system,” Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi Fonacier said. Currently, banks are being rated using the Camels, an international rating system used to assess banks’ capital adequacy, asset quality, management, earnings, liquidity and sensitivity. Fonacier explained that SAFr is forward-looking with a four-point rating scale, while Camels which assessments tend to be historical, has a five-point system. “SAFr will assess banks’ business model. It is really holistic. It will assess the different kind of risks and how will that feed in into the overall condition of the bank for the next one to two years,” she said. SAFr incorporates reputation risk management for banks, which means these financial institutions should be very conscious of what are the potential threats to their reputation, she added and pointed out that SAFr was patterned to international rating practices.
