BSP removes reserve requirement for trust accounts

February 13, 2026 | 12:00am

MANILA, Philippines —  The Bangko Sentral ng Pilipinas (BSP) has removed the reserve requirement for trust and other fiduciary accounts, a sharp shift from earlier rules that required banks to set aside up to 17 percent of trust funds as reserves.

Under BSP Circular 1229, the central bank set the reserve requirement for trust and other fiduciary accounts at zero percent, effective Feb. 27.

Trust and fiduciary accounts refer to funds that banks manage in behalf of clients, such as trust products and investment management accounts. These funds are not owned by the bank and are kept separate from regular deposits.

Based on the 2023 Manual of Regulations for Banks, trust and fiduciary accounts were subject to reserve requirements of 17 percent for universal and commercial banks, nine percent for thrift banks and four percent for rural banks. Banks were also required to maintain separate, non-interest-bearing reserve accounts with the BSP for trust funds.

“The circular reaffirms the BSP’s commitment to refining prudential regulation that is responsive to evolving market dynamics and aligned with statutory mandate,” BSP Deputy Governor Lyn Javier told The STAR.

“The amendments aim not only to strengthen liquidity management among BSP-supervised financial institutions, but also to promote capital market development and improve supervisory oversight, ensuring that the reserve requirement system remains a robust pillar of the financial system architecture,” she said.

The BSP also adjusted reserve requirements for several other instruments in line with earlier reductions in reserve ratios. These include a cut in required reserves on bonds issued by universal and commercial banks and digital banks to two percent from three percent to support capital market development, as well as the reduction to zero of reserve requirements on bonds and mortgage or chattel mortgage certificates issued by thrift banks.

The BSP likewise reduced the reserve requirement on long-term negotiable certificates of time deposits to zero from four percent, citing the indefinite moratorium on LTNCD issuance that has been in place since 2021.

“Based on BSP’s computation, the excess liquidity that will be released based on these reductions in the required reserves is not expected to pose a significant impact on monetary aggregates or economic indicators,” the central bank said.

Aside from removing reserves on trust accounts, the BSP also clarified rules on the computation of reserve positions, including the treatment of weekends, holidays and clearing days and reaffirmed sanctions for reserve deficiencies.