## 1. Priority Recommendations

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### Summary of Mission Outcomes and Priority Recommendations
- Mission: IMF Statistics Department (STA) remote FSIs technical assistance (TA) mission, with support from Asia and Pacific Department (APD) and Bangko Sentral ng Pilipinas (BSP), during April 30–May 14, 2021.
- Objective: Assist BSP in compiling Financial Soundness Indicators (FSIs) for the other financial corporations (OFCs) sector in line with the 2019 Financial Soundness Indicators Compilation Guide (Guide).
- BSP collaboration: Work facilitated by Department of Economic Statistics (DES); list of officials met in Appendix I.
- Rationale: OFCs have more than 9 trillion pesos in total assets, representing around 25 percent of total financial system assets; subsector includes public and private insurance companies, trusts, government financial institutions, holding companies, mutual funds (money market and non-money market), private pension funds, and other financial intermediaries and auxiliaries.
- Key capacity-building: Mission assisted with mapping source data for insurance companies into new FSI templates; provided hands-on training on the Guide and methodological differences between Monetary and Financial Statistics (MFS) and FSIs. Formal training recommended.
- Timeline agreement: Action plan positions BSP to be ready to submit new FSI templates as soon as STA is ready to receive them—expected in the second half of 2021.
- Priority: Detailed action plan with priority recommendations provided; further details and milestones in the action plan under Detailed Technical Assessment and Recommendations.

### Priority recommendations (table summary)
- Target Date: September 2021
  - Compile FSI for the total OFCs sector on a quarterly basis using the existing coverage available for MFS, starting with data for 2018Q4, with a time-lag of no more than four months after the reference quarter.
  - Responsible Institutions: BSP
- Target Date: October 2021
  - Compile underlying data and specific FSIs for insurance companies using available data on a quarterly basis, with a time-lag of no more than four months after the reference quarter, starting with 2020Q4 data.
  - Responsible Institutions: BSP
- Target Date: October 2021
  - BSP to start regular reporting to STA, for posting on the IMF’s FSI website, the FSI sectoral financial statements (FS2 template) for OFCs, including the balance sheet, income statement, and memorandum series, starting with quarterly data for 2020Q4; the sectoral FSIs with underlying series (FSD Template) for OFCs starting with quarterly data for 2020Q4; and the updated FS1 template (institutional coverage) starting with annual data for 2020.
  - Responsible Institutions: BSP

### Background — Context
- First TA mission on FSIs for OFCs for the Philippines; aim to help close data gaps for OFCs to support macroprudential analysis following the global financial crisis 2007–2008.
- Guide innovations: comprehensive set of reporting requirements and FSIs for OFCs, including Money Market Funds (MMFs), Insurance Corporations (ICs—separately for life and nonlife), and Pension Funds (PFs).
- Guide recommendation: OFCs balance sheets compiled on a residency-based basis for all OFCs subsectors unless significant cross-border activities exist; Philippines is not one of these countries and cross-border consolidation data are not available.
- Data reporting requirements are presented in Appendix II of the source.

### Structure of the Financial System in the Philippines (key figures)
- For FSI purposes, financial sector divided into Deposit Takers and OFCs. Compared to MFS, deposit takers exclude the central bank and MMFs.
- DECEMBER 2020; values in millions of pesos:
  - FINANCIAL CORPORATIONS: 36,664,516 (100 percent of sector)
  - A. DEPOSITORY CORPORATIONS: 27,570,380 (100 percent of subsector; 75 percent of sector)
    - 1) Bangko Sentral ng Pilipinas: 7,074,147 (26 percent of subsector; 19 percent of sector)
    - 2) Deposit takers: 20,496,233 (74 percent of subsector; 56 percent of sector)
  - B. OTHER FINANCIAL CORPORATIONS: 9,094,136 (100 percent of subsector; 25 percent of sector)
    - 1) Trusts: 3,460,982 (38 percent of subsector; 9 percent of sector)
    - 2) Insurance Corporations: 2,194,773 (24 percent of subsector; 6 percent of sector)
    - 3) Holding Companies 2/: 1,617,482 (18 percent of subsector; 4 percent of sector)
    - 4) Government Financial Institutions: 820,738 (9 percent of subsector; 2 percent of sector)
    - 5) Investment Funds (MMFs and non-MMFs): 745,571 (8 percent of subsector; 2 percent of sector)
    - 6) Other Financial Intermediaries and Auxiliaries: 254,590 (3 percent of subsector; 1 percent of sector)
  - Note 1/: Millions of pesos.
  - Note 2/: Data for 2020 is based on the financial statements of 25 of the largest companies only. Total number of companies and size is unknown.
  - Source: BSP

### Detailed Technical Assessment and Recommendations

H3: A. FSIs for the Total Other Financial Corporations Sector
- OFCs are relatively sizable in the Philippines but not currently included in FSIs disseminated by the BSP.
- Guide recommends two indicators for the whole OFC sector:
  - OFCs’ assets to total financial system assets
  - OFCs’ assets to GDP
- These two indicators can be compiled quarterly, although pension funds data are not currently available.
- Mission developed FSI-like indicators for financial trusts and holding and financial companies where data are available.
- Recommendation:
  - Compile FSIs for the total OFCs sector using the existing coverage available for MFS, on a quarterly basis, starting in 2018Q4, with a time-lag of no more than four months after the reference quarter.
  - Target date: September 2021.

H3: B. FSIs for Insurance Companies
- Insurance companies manage assets of 2.2 trillion pesos, constituting 24 percent of total OFCs assets.
- Supervision: Insurance companies are supervised by the Insurance Commission (IC), which collaborates with BSP and supervised insurance companies.
- Data reporting: Insurance companies report data directly to BSP using standard structured templates, enabling good-quality FSI compilation; BSP compilers plan to enhance templates to address relatively small data gaps.
- Mapping completed for four types of insurance companies: private Life insurance companies, private non-life insurance companies, public non-life insurance companies, and pre-need insurance companies.
- Recommendation:
  - Compile underlying data and specific FSIs for insurance companies using available data on a quarterly basis, with a time-lag of no more than four months after the reference quarter, starting with 2020Q4 data.
  - Target date: October 2021.

H3: C. FSIs for Money Market Funds (MMFs)
- Definition: MMFs are collective investment schemes issuing shares/units to the public and investing primarily in money market instruments, MMF shares or units, transferable debt instruments with residual maturity no more than one year, bank deposits, and instruments that pursue returns close to money market interest rates. In the Philippines, money market UITFs should be treated as MMFs for statistical purposes.
- Data availability: Balance sheet data on money market UITFs are available to BSP but must be separately identified from non-MMFs.
- Guide-recommended MMF FSIs to gauge credit and liquidity risk:
  1) Sectoral distribution of investments.
  2) Maturity distribution of investments.
- Current data gaps: Income statement and maturity distribution of investments are not yet available; Guide recommends maturity categories 1–30 days, 31–90 days, and more than 90 days.
- Priority: Due to relative small size of MMFs in the Philippines (around one percent of the total financial system), collection of maturity and income statement data has medium to low priority.
- Recommendations:
  - (i) Compile underlying data and specific FSIs for MMFs using existing data on a quarterly basis, starting in 2020Q4, with a time-lag of no more than four months after the reference quarter.
    - Target date: October 2021.
  - (ii) Collect MMFs data on income statement and maturity distribution of investments to improve compilation of FSIs for MMFs.
    - Target date: May 2022.

H3: D. FSIs for Pension Funds
- Private pension funds are not regulated in the Philippines; they may be organized as special purpose trust funds, but no regulator currently collects data on them.
- Regulatory option: New BSP authority to collect data from any person or entity could be used to collect data directly from the largest private pension funds.
- Holdings concern: These funds may hold significant amounts of domestic private and public sector debt; government debt statistics on domestic securities show values significantly higher than holdings of debt securities reported by the financial sector, leaving the possibility of significant holdings by households, non-financial corporations (NFCs), or private pension funds.
- Recommendation:
  - BSP to identify a regulatory agency or unit within the institution to make an inventory of private pension funds and start collecting data (on the largest ones, at least) relevant for FSI compilation.
  - Target date: December 2021.
- Implementation note:
  - In the short term, BSP may survey large corporations to identify existing private pension funds (in-house or subsidiary) using authority to collect data; long-term concern to be raised to appropriate forum to identify supervisory body for private pension funds.

H3: E. FSIs for Holding Companies, Investment Companies, and Trusts
- Data compiled by BSP using IMF standardized report form (SRF) 4SR.
- In absence of specific FSIs for these OFC types in the Guide, mission developed SRF-based macroprudential indicators for holding companies, investment companies, and trusts (Appendix III).
- Rationale: These companies and trusts have more than 5 trillion pesos in total assets, representing over 18 percent of OFC assets; their size justifies compilation of macroprudential indicators.
- Guide encouragement: Countries are encouraged to compile data and indicators for additional financial sub-sectors relevant to financial stability analysis (Guide paragraph 9.3).
- Recommendation:
  - BSP to compile the indicators developed by the mission for holding companies, investment companies, and trusts, starting in 2018Q4 and on a quarterly basis for internal use and to share with IMF users on request.
  - Target date: November 2021.
- Data collection limitations:
  - Holding and investment companies are supervised by the SEC.
  - BSP collects annual and quarterly data using standard structured templates designed by the OFCS Team.
  - BSP only collects data on SEC top 1000 corporations, out of more than 16,000 registered holding companies in the Philippines, which include OFCs.

### Identification of largest holding and investment companies; legal authority to collect data
- BSP compilers reported difficulties identifying the largest holding and investment companies among the top 1000 corporations supervised by the SEC.
- The SEC provided information on total revenue of these companies, but for MFS purposes the preferred metric is total financial assets, or total assets if financial assets are not available.
- SEC-provided lists referenced: 2015 and 2016 Top 1000 corporations. The SEC should furnish the same listing based on 2020 data.
- Legal authority:
  - Republic Act 11211 (An Act Amending Republic Act Number 7653, otherwise known as “The New Central Bank Act”) (February 2019) amended the BSP Charter to provide BSP authority to obtain information for statistical and policy development purposes from any person or entity, including individuals and private corporations, government offices and instrumentalities, or government-owned and controlled corporations.
  - Despite the new authority, it "has yet to be used" to improve data reporting by SEC-supervised corporations.
- Recommendations to improve coverage and data collection:
  - BSP to continue requesting assistance from the SEC in providing an updated list of holding and investment companies by total assets.
  - OFC data compilers to focus on identifying and compiling data from the latest publication of the top 1000 corporations supervised by the SEC to increase the sample survey.
  - BSP to continue citing the new authority to collect data from any person or entity to improve data reporting by SEC-supervised corporations.

### Financial trusts (trust entities) — size, classification, and reporting
- Total under management: 3.5 trillion pesos under management in December 2020.
- Share of OFC subsector: represent around 38 percent of the total OFC subsector.
- Management and statistical treatment:
  - Mostly managed by banks on behalf of clients.
  - Considered separate statistical units; assets/liabilities not included in the balance sheet of the managing bank.
  - Data available quarterly with a time lag of two months after the reference quarter.
- Types and classification:
  - Some trusts are collective investment schemes (UITFs); others are individual or institutional account trusts.
  - UITFs should be classified as investment funds and, depending on maturity and liquidity, as MMFs or non-MMFs.
    - MMFs: invested in short-term, liquid, low risk instruments; belong to OFC subsector for FSI compilation, even when classified as depository corporations in the MFS.
    - Non-MMFs: invest in longer maturity or riskier assets (bonds, equities, commodities); classified in OFC subsector in MFS and FSI compilation.
  - Financial trusts that are not collective investment schemes belong in the OFC subcategory of captive financial institutions.

### FSI reporting and metadata
- BSP position: to begin regularly reporting FSIs for OFCs commencing in the second half of 2021.
- STA had not started requesting the new FSI templates in line with the 2019 Guide at the time of the mission; once STA is ready the BSP will be able to report with quarterly frequency.
- Need to complement FSI data with corresponding metadata to permit informed interpretation and cross-country comparisons.
  - Mission provided a very preliminary draft of the metadata (Appendix IV); draft to be revised once STA defines a template for metadata reporting.
- Institutional coverage for FSIs (as compiled for the Philippines):
  - FSIs for OFCs compiled on an aggregated residency-based approach (no consolidation applied).
  - Coverage: all private insurance companies and MMFs. Pension funds excluded due to unavailable data.
  - Accounting framework: private insurance companies and MMFs follow IFRS, including IAS 21 and IFRS 9; interest is accrued on financial instruments.

### Action Plan — prioritized actions, milestones, and target dates (selected)
- Outcome Indicator: A new data set has been compiled and disseminated internally and/or to the public.

High priority (H)
- Compile FSIs for the total OFC sector using existing coverage available for MFS, on a quarterly basis, starting with data for 2018Q4, with a time-lag of no more than four months after the reference quarter.
  - Verifiable indicator: Table 5.5 of the new FSI reporting templates compiled.
  - Target Completion Date: September 2021.
- Compile underlying data and specific FSIs for insurance companies using available data on a quarterly basis, with a time-lag of no more than four months after the reference quarter, starting with 2020Q4 data.
  - Verifiable indicator: Table 5.3 of the new FSI reporting templates compiled.
  - Target Completion Date: October 2021.
- Compile underlying data and specific FSIs for MMFs using existing data on a quarterly basis, starting with data for 2020Q4, with a time-lag of no more than four months after the reference quarter.
  - Verifiable indicator: Table 5.2 of the new FSI reporting templates compiled.
  - Target Completion Date: October 2021.
- BSP to start regular reporting to STA, for posting on the IMF’s FSI website:
  - FS2 template for OFCs (balance sheet, income statement, memorandum series) starting with quarterly data for 2020Q4;
  - FSD Template for OFCs starting with quarterly data for 2020Q4;
  - Updated FS1 template (institutional coverage) starting with annual data for 2020.
  - Verifiable indicator: Tables 5.3 and 5.5 reported to STA for publication.
  - Target Completion Date: October 2021.

Medium priority (M)
- Collect MMFs data on income statement and maturity distribution of investments to improve compilation of FSIs for MMFs.
  - Verifiable indicator: Improved Table 5.2 of the new FSI reporting templates compiled.
  - Target Completion Date: May 2022.
- Identify a regulatory agency or unit within the BSP to make an inventory of private pension funds and start collecting data (on the largest ones, at least) relevant for FSIs.
  - Verifiable indicator: Regulatory agency or unit responsible for the inventory identified.
  - Target Completion Date: December 2021.
- Compile the indicators for holding companies, investment companies, and trusts developed by the mission, starting in 2018q4 and on a quarterly basis for internal use and to share with IMF users on request.
  - Verifiable indicator: Financial indicators for holding companies, investment companies, and trusts compiled.
  - Target Completion Date: November 2021.
- (1) BSP to continue requesting assistance from the SEC in providing an updated list of holding and investment companies by total assets; (2) OFC data compilers to focus on identifying and compiling data from the latest publication of the top 1000 corporations supervised by the SEC to increase the sample survey; (3) BSP to continue citing the new authority to collect data from any person or entity to improve data reporting by SEC-supervised.
  - Verifiable indicator: Updated list of holding and investment companies available to improve data collection.
  - Target Completion Date: December 2021.

Training (M)
- Support BSP staff efforts to participate in IMF FSIs training courses to improve methodological knowledge and skills in compilation and interpretation of the FSIs.
  - Verifiable indicator: BSP compilers trained in the compilation of FSIs for OFCs, following the Guide.
  - Target Completion Date: May 2021 and on-going.

### Appendix highlights — indicators and metadata (selected)
- FSIs and indicators to be compiled for OFCs include:
  - S730 Other financial corporations
  - I031 OFCs' assets to total financial assets
  - S740 OFCs' assets: total OFCs
  - S760 OFCs' assets: Money Market funds
  - S780 OFCs' assets: Insurance Corporations
  - S800 OFCs' assets: Pension Funds
  - S810 Total financial system assets
  - I032 OFCs' assets to gross domestic product
  - S900 Gross domestic product
  - S910 Money Market funds (MMF)
  - I033 Sectoral distribution of investments (Residents, Central bank, Deposit takers, Other financial corporations, Central government, Other general government, Nonfinancial corporations, Nonresidents, Total investments)
  - I034 Maturity distribution of investments (1–30 days; 31–90 days; >90 days; Total investments)
  - Insurance and pension specific indicators (shareholder equity to total invested assets, combined ratio, return on assets, return on equity, liquid assets to estimated pension payments in the next year)
- Metadata guidance:
  - Residence: foreign-controlled OFC incorporated in the Philippines are classified as residents in line with SNA 2008.
  - Consolidation basis: aggregated residency-based approach; no consolidation applied.
  - Accounting framework: IFRS (including IAS 21 and IFRS 9); interest accrued on financial instruments.
  - Data definitions: examples provided for Return on assets and Return on equity; further metadata pending and to be disseminated with FSIs.

*Source: IMF STA mission report, “1. Priority Recommendations” chapter.*

### 1. Priority Recommendations _____________________________________________________________________ 6

### 1. Priority Recommendations

### Summary of Mission Outcomes and Priority Recommendations
- Mission: IMF Statistics Department (STA) remote FSIs technical assistance (TA) mission, with support from Asia and Pacific Department (APD) and Bangko Sentral ng Pilipinas (BSP), during April 30–May 14, 2021.
- Objective: Assist BSP in compiling Financial Soundness Indicators (FSIs) for the other financial corporations (OFCs) sector in line with the 2019 Financial Soundness Indicators Compilation Guide (Guide).
- BSP collaboration: Work facilitated by Department of Economic Statistics (DES); list of officials met in Appendix I.
- Rationale: OFCs have more than 9 trillion pesos in total assets, representing around 25 percent of total financial system assets; subsector includes public and private insurance companies, trusts, government financial institutions, holding companies, mutual funds (money market and non-money market), private pension funds, and other financial intermediaries and auxiliaries.
- Key capacity-building: Mission assisted with mapping source data for insurance companies into new FSI templates; provided hands-on training on the Guide and methodological differences between Monetary and Financial Statistics (MFS) and FSIs. Formal training recommended.
- Timeline agreement: Action plan positions BSP to be ready to submit new FSI templates as soon as STA is ready to receive them—expected in the second half of 2021.
- Priority: Detailed action plan with priority recommendations provided; further details and milestones in the action plan under Detailed Technical Assessment and Recommendations.

### Table 1 — Priority Recommendations (as presented)
- Target Date: September 2021
  - Priority Recommendation: Compile FSI for the total OFCs sector on a quarterly basis using the existing coverage available for MFS, starting with data for 2018Q4, with a time-lag of no more than four months after the reference quarter.
  - Responsible Institutions: BSP
- Target Date: October 2021
  - Priority Recommendation: Compile underlying data and specific FSIs for insurance companies using available data on a quarterly basis, with a time-lag of no more than four months after the reference quarter, starting with 2020Q4 data.
  - Responsible Institutions: BSP
- Target Date: October 2021
  - Priority Recommendation: The BSP to start regular reporting to STA, for posting on the IMF’s FSI website, the FSI sectoral financial statements (FS2 template) for OFCs, including the balance sheet, income statement, and memorandum series, starting with quarterly data for 2020Q4; the sectoral FSIs with underlying series (FSD Template) for OFCs starting with quarterly data for 2020Q4; and the updated FS1 template (institutional coverage) starting with annual data for 2020.
  - Responsible Institutions: BSP

### Background — Context
- First TA mission on FSIs for OFCs for the Philippines; aim to help close data gaps for OFCs to support macroprudential analysis following the global financial crisis 2007–2008.
- Guide innovations: comprehensive set of reporting requirements and FSIs for OFCs, including Money Market Funds (MMFs), Insurance Corporations (ICs—separately for life and nonlife), and Pension Funds (PFs).
- Guide recommendation: OFCs balance sheets compiled on a residency-based basis for all OFCs subsectors unless significant cross-border activities exist; Philippines is not one of these countries and cross-border consolidation data are not available.
- Data reporting requirements are presented in Appendix II of the source.

### Structure of the Financial System in the Philippines (key figures)
- For FSI purposes, financial sector divided into Deposit Takers and OFCs. Compared to MFS, deposit takers exclude the central bank and MMFs.
- Table 2 — Structure of the Financial System in the Philippines (DECEMBER 2020; values in millions of pesos):
  - FINANCIAL CORPORATIONS: 36,664,516 (100 percent of sector)
  - A. DEPOSITORY CORPORATIONS: 27,570,380 (100 percent of subsector; 75 percent of sector)
    - 1) Bangko Sentral ng Pilipinas: 7,074,147 (26 percent of subsector; 19 percent of sector)
    - 2) Deposit takers: 20,496,233 (74 percent of subsector; 56 percent of sector)
  - B. OTHER FINANCIAL CORPORATIONS: 9,094,136 (100 percent of subsector; 25 percent of sector)
    - 1) Trusts: 3,460,982 (38 percent of subsector; 9 percent of sector)
    - 2) Insurance Corporations: 2,194,773 (24 percent of subsector; 6 percent of sector)
    - 3) Holding Companies 2/: 1,617,482 (18 percent of subsector; 4 percent of sector)
    - 4) Government Financial Institutions: 820,738 (9 percent of subsector; 2 percent of sector)
    - 5) Investment Funds (MMFs and non-MMFs): 745,571 (8 percent of subsector; 2 percent of sector)
    - 6) Other Financial Intermediaries and Auxiliaries: 254,590 (3 percent of subsector; 1 percent of sector)
  - Source: BSP
  - Note 1/: Millions of pesos.
  - Note 2/: Data for 2020 is based on the financial statements of 25 of the largest companies only. Total number of companies and size is unknown.

### Detailed Technical Assessment and Recommendations

H3: A. FSIs for the Total Other Financial Corporations Sector
- OFCs are relatively sizable in the Philippines but not currently included in FSIs disseminated by the BSP.
- Guide recommends two indicators for the whole OFC sector:
  - OFCs’ assets to total financial system assets; and,
  - OFCs’ assets to GDP.
- These two indicators can be compiled quarterly, although pension funds data are not currently available (see Table 3 in source).
- Mission developed FSI-like indicators for financial trusts and holding and financial companies where data are available.
- Recommendation: Compile FSIs for the total OFCs sector using the existing coverage available for MFS, on a quarterly basis, starting in 2018Q4, with a time-lag of no more than four months after the reference quarter, by September 2021.

H3: B. FSIs for Insurance Companies
- Insurance companies manage assets of 2.2 trillion pesos, constituting 24 percent of total OFCs assets.
- Supervision: Insurance companies are supervised by the Insurance Commission (IC), which collaborates with BSP and supervised insurance companies.
- Data reporting: Insurance companies report data directly to BSP using standard structured templates, enabling good-quality FSI compilation; BSP compilers plan to enhance templates to address relatively small data gaps.
- Mapping completed for four types of insurance companies: private Life insurance companies, private non-life insurance companies, public non-life insurance companies, and pre-need insurance companies.
- Recommendation: Compile underlying data and specific FSIs for insurance companies using available data on a quarterly basis, with a time-lag of no more than four months after the reference quarter, starting with 2020Q4 data, by October 2021.

H3: C. FSIs for Money Market Funds (MMFs)
- Definition: MMFs are collective investment schemes issuing shares/units to the public and investing primarily in money market instruments, MMF shares or units, transferable debt instruments with residual maturity no more than one year, bank deposits, and instruments that pursue returns close to money market interest rates. In the Philippines, money market UITFs should be treated as MMFs for statistical purposes.
- Data availability: Balance sheet data on money market UITFs are available to BSP but must be separately identified from non-MMFs.
- Guide-recommended MMF FSIs to gauge credit and liquidity risk:
  1) Sectoral distribution of investments.
  2) Maturity distribution of investments.
- Current data gaps: Income statement and maturity distribution of investments are not yet available; Guide recommends maturity categories 1–30 days, 31–90 days, and more than 90 days.
- Priority: Due to relative small size of MMFs in the Philippines (around one percent of the total financial system), collection of maturity and income statement data has medium to low priority.
- Recommendations:
  - (i) Compile underlying data and specific FSIs for MMFs using existing data on a quarterly basis, starting in 2020Q4, with a time-lag of no more than four months after the reference quarter, by October 2021.
  - (ii) Collect MMFs data on income statement and maturity distribution of investments to improve compilation of FSIs for MMFs, by May 2022.

H3: D. FSIs for Pension Funds
- Private pension funds are not regulated in the Philippines; they may be organized as special purpose trust funds, but no regulator currently collects data on them.
- Regulatory option: New BSP authority to collect data from any person or entity could be used to collect data directly from the largest private pension funds.
- Holdings concern: These funds may hold significant amounts of domestic private and public sector debt; government debt statistics on domestic securities show values significantly higher than holdings of debt securities reported by the financial sector, leaving the possibility of significant holdings by households, non-financial corporations (NFCs), or private pension funds.
- Recommendation: BSP to identify a regulatory agency or unit within the institution to make an inventory of private pension funds and start collecting data (on the largest ones, at least) relevant for FSI compilation. Target date: December 2021.
- Implementation note: In the short term, BSP may survey large corporations to identify existing private pension funds (in-house or subsidiary) using authority to collect data; long-term concern to be raised to appropriate forum to identify supervisory body for private pension funds.

H3: E. FSIs for Holding Companies, Investment Companies, and Trusts
- Data compiled by BSP using IMF standardized report form (SRF) 4SR.
- In absence of specific FSIs for these OFC types in the Guide, mission developed SRF-based macroprudential indicators for holding companies, investment companies, and trusts (Appendix III).
- Rationale: These companies and trusts have more than 5 trillion pesos in total assets, representing over 18 percent of OFC assets; their size justifies compilation of macroprudential indicators.
- Guide encouragement: Countries are encouraged to compile data and indicators for additional financial sub-sectors relevant to financial stability analysis (Guide paragraph 9.3).
- Recommendation: BSP to compile the indicators developed by the mission for holding companies, investment companies, and trusts, starting in 2018Q4 and on a quarterly basis for internal use and to share with IMF users on request. Target date: November 2021.
- Data collection limitations:
  - Holding and investment companies are supervised by the SEC.
  - BSP collects annual and quarterly data using standard structured templates designed by the OFCS Team.
  - BSP only collects data on SEC top 1000 corporations, out of more than 16,000 registered holding companies in the Philippines, which include OFCs.

*Source: IMF STA mission report, “1. Priority Recommendations” chapter.*

### 33. BSP compilers have difficulties in identifying the largest holding and investment

### 1phlea2021005 - 33. BSP compilers have difficulties in identifying the largest holding and investment

### Identification of largest holding and investment companies
- BSP compilers reported difficulties identifying the largest holding and investment companies among the top 1000 corporations supervised by the SEC.
- The SEC provided information on total revenue of these companies, but for MFS purposes the preferred metric is total financial assets, or total assets if financial assets are not available.
- SEC-provided lists referenced: 2015 and 2016 Top 1000 corporations. The SEC should furnish the same listing based on 2020 data.

### Legal authority to collect data
- 2018 mission highlighted need to enhance BSP authority to collect statistical data from private entities.
- Republic Act 11211 (An Act Amending Republic Act Number 7653, otherwise known as “The New Central Bank Act”) (February 2019) amended the BSP Charter to provide BSP authority to obtain information for statistical and policy development purposes from any person or entity, including individuals and private corporations, government offices and instrumentalities, or government-owned and controlled corporations.
- Despite the new authority, it "has yet to be used" to improve data reporting by SEC-supervised corporations.

### Recommendations to improve coverage and data collection
- BSP to continue requesting assistance from the SEC in providing an updated list of holding and investment companies by total assets.
- OFC data compilers to focus on identifying and compiling data from the latest publication of the top 1000 corporations supervised by the SEC to increase the sample survey.
- BSP to continue citing the new authority to collect data from any person or entity to improve data reporting by SEC-supervised corporations.

### Financial trusts (trust entities) — size and classification
- Total under management: 3.5 trillion pesos under management in December 2020.
- Share of OFC subsector: represent around 38 percent of the total OFC subsector.
- Management and statistical treatment:
  - Mostly managed by banks on behalf of clients.
  - Considered separate statistical units; assets/liabilities not included in the balance sheet of the managing bank.
  - Data available quarterly with a time lag of two months after the reference quarter.
- Types and classification:
  - Some trusts are collective investment schemes (UITFs); others are individual or institutional account trusts.
  - UITFs should be classified as investment funds and, depending on maturity and liquidity, as MMFs or non-MMFs.
    - MMFs: invested in short-term, liquid, low risk instruments; belong to OFC subsector for FSI compilation, even when classified as depository corporations in the MFS.
    - Non-MMFs: invest in longer maturity or riskier assets (bonds, equities, commodities); classified in OFC subsector in MFS and FSI compilation.
  - Financial trusts that are not collective investment schemes belong in the OFC subcategory of captive financial institutions.

### FSI reporting and metadata
- BSP position: to begin regularly reporting FSIs for OFCs commencing in the second half of 2021.
- STA had not started requesting the new FSI templates in line with the 2019 Guide at the time of the mission; once STA is ready the BSP will be able to report with quarterly frequency.
- Need to complement FSI data with corresponding metadata to permit informed interpretation and cross-country comparisons.
  - Mission provided a very preliminary draft of the metadata (Appendix IV); draft to be revised once STA defines a template for metadata reporting.
- Institutional coverage for FSIs (as compiled for the Philippines):
  - FSIs for OFCs compiled on an aggregated residency-based approach (no consolidation applied).
  - Coverage: all private insurance companies and MMFs. Pension funds excluded due to unavailable data.
  - Accounting framework: private insurance companies and MMFs follow IFRS, including IAS 21 and IFRS 9; interest is accrued on financial instruments.

### Action Plan — prioritized actions, milestones, and target dates (selected)
- Outcome Indicator: A new data set has been compiled and disseminated internally and/or to the public.
- High priority (H)
  - Compile FSIs for the total OFC sector using existing coverage available for MFS, on a quarterly basis, starting with data for 2018Q4, with a time-lag of no more than four months after the reference quarter.
    - Verifiable indicator: Table 5.5 of the new FSI reporting templates compiled.
    - Target Completion Date: September 2021.
  - Compile underlying data and specific FSIs for insurance companies using available data on a quarterly basis, with a time-lag of no more than four months after the reference quarter, starting with 2020Q4 data.
    - Verifiable indicator: Table 5.3 of the new FSI reporting templates compiled.
    - Target Completion Date: October 2021.
  - Compile underlying data and specific FSIs for MMFs using existing data on a quarterly basis, starting with data for 2020Q4, with a time-lag of no more than four months after the reference quarter.
    - Verifiable indicator: Table 5.2 of the new FSI reporting templates compiled.
    - Target Completion Date: October 2021.
  - BSP to start regular reporting to STA, for posting on the IMF’s FSI website:
    - FS2 template for OFCs (balance sheet, income statement, memorandum series) starting with quarterly data for 2020Q4;
    - FSD Template for OFCs starting with quarterly data for 2020Q4;
    - Updated FS1 template (institutional coverage) starting with annual data for 2020.
    - Verifiable indicator: Tables 5.3 and 5.5 reported to STA for publication.
    - Target Completion Date: October 2021.
- Medium priority (M)
  - Collect MMFs data on income statement and maturity distribution of investments to improve compilation of FSIs for MMFs.
    - Verifiable indicator: Improved Table 5.2 of the new FSI reporting templates compiled.
    - Target Completion Date: May 2022.
  - Identify a regulatory agency or unit within the BSP to make an inventory of private pension funds and start collecting data (on the largest ones, at least) relevant for FSIs.
    - Verifiable indicator: Regulatory agency or unit responsible for the inventory identified.
    - Target Completion Date: December 2021.
  - Compile the indicators for holding companies, investment companies, and trusts developed by the mission, starting in 2018q4 and on a quarterly basis for internal use and to share with IMF users on request.
    - Verifiable indicator: Financial indicators for holding companies, investment companies, and trusts compiled.
    - Target Completion Date: November 2021.
  - (1) BSP to continue requesting assistance from the SEC in providing an updated list of holding and investment companies by total assets; (2) OFC data compilers to focus on identifying and compiling data from the latest publication of the top 1000 corporations supervised by the SEC to increase the sample survey; (3) BSP to continue citing the new authority to collect data from any person or entity to improve data reporting by SEC-supervised.
    - Verifiable indicator: Updated list of holding and investment companies available to improve data collection.
    - Target Completion Date: December 2021.
- Training (M)
  - Support BSP staff efforts to participate in IMF FSIs training courses to improve methodological knowledge and skills in compilation and interpretation of the FSIs.
    - Verifiable indicator: BSP compilers trained in the compilation of FSIs for OFCs, following the Guide.
    - Target Completion Date: May 2021 and on-going.

### Appendix highlights — indicators and metadata (selected)
- FSIs and indicators to be compiled for OFCs include:
  - S730 Other financial corporations
  - I031 OFCs' assets to total financial assets
  - S740 OFCs' assets: total OFCs
  - S760 OFCs' assets: Money Market funds
  - S780 OFCs' assets: Insurance Corporations
  - S800 OFCs' assets: Pension Funds
  - S810 Total financial system assets
  - I032 OFCs' assets to gross domestic product
  - S900 Gross domestic product
  - S910 Money Market funds (MMF)
  - I033 Sectoral distribution of investments (Residents, Central bank, Deposit takers, Other financial corporations, Central government, Other general government, Nonfinancial corporations, Nonresidents, Total investments)
  - I034 Maturity distribution of investments (1–30 days; 31–90 days; >90 days; Total investments)
  - Insurance and pension specific indicators (shareholder equity to total invested assets, combined ratio, return on assets, return on equity, liquid assets to estimated pension payments in the next year)
- Metadata guidance:
  - Residence: foreign-controlled OFC incorporated in the Philippines are classified as residents in line with SNA 2008.
  - Consolidation basis: aggregated residency-based approach; no consolidation applied.
  - Accounting framework: IFRS (including IAS 21 and IFRS 9); interest accrued on financial instruments.
  - Data definitions: examples provided for Return on assets and Return on equity; further metadata pending and to be disseminated with FSIs.

*Source: PHILIPPINES — IMF staff report content (chapters and appendices provided in the source PDF).*

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_Source: https://www.imf.org/-/media/files/publications/cr/2021/english/1phlea2021005.pdf_