Six banks from Asia are interested in setting up operations in the Philippines, Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said at the annual reception for the banking community held Tuesday night.
“We thank Congress for its full support of initiatives liberalizing foreign entry into the banking system. This eventually became law, specifically RA [Republic Act] 10574 and RA 10641. On the latter, we are happy to report that nine banks have entered the Philippine banking industry thus far, with six more banks expressing interest,” he said.
On the sidelines of the reception, BSP Deputy Governor Nestor Espenilla Jr. said the details and the requirements are still being worked out. He did not identify the banks.
The banking sector began attracting foreign players after the RA 10641, or the Act Allowing the Full Entry of Foreign Banks in the Philippines, was passed in July 2014. The law lifted the prevailing equity limit of 60 percent for foreign partners and allowed 100 percent ownership of the voting shares in an existing domestic bank.
Foreign banks may operate in the Philippines as a branch or a wholly owned subsidiary, with the BSP taking into consideration strategic relationships and reciprocity rights in accepting applications.
A separate assessment by regulators in the banks’ respective countries of origin is also a requirement.
In his speech during the event, Tetangco said the Philippine banking industry played a significant role in helping sustain the pace of growth of the economy, which grew by 7 percent in the first nine months of 2016.
“Bank lending continued to expand by double-digit rates and went mostly to productive sectors,” he said, noting that as of November 2016, consolidated bank loans reached P7.4 trillion, up almost 18.5 percent from a year earlier.
Total assets of the banking industry reached P13.2 trillion, up over 12 percent from November 2015, while deposits increased by more than 13 percent to P10.1 trillion, an all-time high.
“In other words, ladies and gentlemen, the Philippine banking sector not only survived 2016, it continued to thrive,” the central bank chief noted.
Stress tests indicated that banks can withstand extreme shocks in both credit and market risks, while third party analysts also have positive reviews concerning the banking industry, he said.
“For instance, the Philippines is the only banking industry within Asia Pacific that was given positive outlook by Fitch Ratings in 2016. Meanwhile, Moody’s recognized our banking industry as the only one within Asean [Association of Southeast Asian Nations] that has a stable outlook on all rating factors – operating environment, asset quality and capital, profitability, funding and liquidity,” he said.
“Indeed, our banking sector is sound, stable, and continues to be a source of strength for our economy. The Philippine economy has recorded 71 quarters of uninterrupted growth. Our banks helped nurture this virtuous cycle for our economy,” he added.