Some foreign banks from Asia, Europe and the Middle East have expressed an interest in operating wholly owned subsidiaries in the Philippines following the Monetary Board’s approval of the guidelines for implementation of a banking liberalization law, Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said over the weekend.
The Board recently approved the implementing rules and regulations (IRR) of Republic Act 10641, the law allowing full entry of foreign banks in the Philippines. It gives freedom for foreign banks to acquire up to 100 percent of the voting stock of an existing domestic bank, after it removed the previous 60 percent foreign equity limit.
Under the relaxed stock ownership regulations, foreign banks may apply to operate locally either as a branch or as a wholly owned subsidiary in the Philippines.
The Monetary Board of the BSP said it will consider strategic relationships and reciprocity rights in accepting the applications of foreign bank entrants. Foreign banks interested in entering the local industry under RA 10641 are required to be widely owned and publicly listed in their home countries.
“We’ve gotten letters expressing their interest. But with regard to formal application, we expect to receive them either before the end of the year or early next year,” Tetangco told reporters.
Foreign banks seeking to operate in the Philippines will be subject to central bank assessment, which will be based on certain criteria.
“We have some criteria for the assessment of applications by foreign banks that want to enter the Philippine banking system. It’s not an assessment that’s based on one indicator or one criterion. It’s an overall assessment of financial capacity, the quality of management and of the systems of the bank,” Tetangco explained.
Besides the overall assessment by the BSP, a separate assessment by the regulators in their respective country of origin will also be required of the foreign bank applicants, he added.