Special deposit investors shifting from IMAs to deposit accounts

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Investors in the special deposit account (SDA) facility of the Bangko Sentral ng Pilipinas (BSP) were shifting their investment vehicle from investment management accounts (IMA) to deposit accounts, a BSP official said over the weekend.

On the sidelines of the BSP Appreciation Dinner for the Banking Community, BSP Deputy Governor Nestor Espenilla Jr. said that funds in the SDA facility have actually going down as the Monetary Board decided that all other SDA placements of trust departments/entities such as IMAs shall be reduced by at least 30 percent until July 30.

SDA facility is a monetary policy made available to bank deployed by the BSP to manage excess domestic liquidity in the financial system.

Trust departments of banks acting as trustees and trust entities are also given access to the facility.

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The BSP has kept the interest rates on SDAs at 2 percent. It also cut the SDA rate three times since January by a total of 150 basis points.

Latest BSP data showed that SDA funds declined by 47 billion, as it stood at P1.738 trillion as of June 28.

“We restricted the IMAs in SDA, but SDA remain as a window, so bank proper can still put money in SDAs. What we have said possibly what can happen is a shift,” Espenilla said.

The BSP official added that the central bank has seen withdrawals of IMAs and a reduction in the trust entities. However, it also noted an increase in the bank proper as investors are shifting to time deposit accounts.

“As people who used to place SDAs to the IMA—since that window is closing down instead of doing that way—people go to time deposits. They changed their investment vehicle from IMAs to time deposit. So we are seeing a decline in the trust placements, but we are seeing an increase in the bank placements,” he added.

Furthermore, Espenilla said that the central bank expects the possible shift of investments to regular deposits, to time deposits, or to government securities.

“We said that our appreciation of who were the investors in the SDA was basically people who want to make sure that their principal is protected, and they want a relatively liquid instrument. These are the characteristics of people who invest in SDA. We also said that people in SDA are not going to go for higher risk . . . the next best thing will be deposits,” he said.

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