AN ASIAN bank could be the first foreign lender to penetrate the Philippine market since rules allowing offshore banks’ entry were liberalized last year, according to a Bangko Sentral ng Pilipinas (BSP) official.
Central bank deputy governor Nestor A. Espenilla, Jr. told reporters yesterday that the BSP is “currently processing one application” from a foreign bank to operate in the Philippines.
“We hope to approve the first one within the first quarter,” Mr. Espenilla said on the sidelines of the Financial Executives of the Philippines’ inaugural meeting and induction ceremony held in Makati City.
The BSP official refused to divulge any information about the bank’s identity, except that it’s from Asia.
Signed into law by President Benigno S.C. Aquino III in July last year, Republic Act (RA) 10641, or An Act Allowing the Full Entry of Foreign Banks in the Philippines, amended certain parts of the two decade-old RA 7721, which sanctioned the entry of a limited number of foreign banks.
The new law’s implementing rules and regulations were approved by the policymaking Monetary Board in November last year, and were released through BSP Circular 858.
RA 10641 states that more foreign banks -- which should be publicly listed in their home country -- could operate in the Philippines by acquiring, purchasing or owning up to 100% of the voting stock of an existing bank.
New entrants could also invest in up to 100% of the voting stock of a new banking subsidiary incorporated under the laws of the Philippines.
A third mode of entry would be through establishing branches with full banking authority.
Despite opening up the industry to more foreign players, the new law still mandates the Monetary Board to take steps in ensuring that at least 60% of the resources or assets of the entire Philippine banking system is held by domestic banks majority-owned by Filipinos.
Such measures include the suspension of entry of additional foreign bank subsidiaries and branches as well as a halt in the license upgrade or conversion to subsidiary of existing foreign bank branches.
Prior to the amendments stipulated in RA 10641, Section 6 of RA 7721 had only allowed up to 10 foreign banks to enter the Philippine market within five years from 1994, when that old law was passed.
Currently, all 10 slots are filled by: CTBC Bank (Philippines) Corp.; Maybank Philippines, Inc.; Bangkok Bank Public Co. Ltd.; Bank of America, N.A.; Bank of China Ltd. Manila Branch; Citibank, N.A.; JP Morgan Chase Bank, N.A.; Korea Exchange Bank; Mega International Commercial Bank Co., Ltd.; and the Bank of Tokyo-Mitsubishi UFJ, Ltd.
Under the old law, only when one of the 10 bank pulls out could another foreign lender enter the Philippine market. -- Daryll Edisonn D. Saclag
source: Businessworld
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