The central bank on Thursday said banks and other financial institutions that are in the process of mergers and acquisitions (M&As) may get regulatory relief, such as a temporary suspension of compliance with the capital adequacy ratio requirement.
This forms part of the regulatory incentives that banks may obtain from the Bangko Sentral ng Pilipinas (BSP) if they opt to merge and consolidate with each other for a stronger financial condition and competitive edge.
The BSP promotes consolidation, mergers and acquisitions of banks and quasi-banks to strengthen the financial capabilities and enhance the overall competitiveness of financial institutions, BSP Deputy Governor Nestor Espenilla Jr. said in a Dec 21 memorandum.
“Concerned banks and QBs may request regulatory incentives that are responsive to their specific needs and reasonable given the attendant circumstances. Any request shall be subject to BSP’s evaluation and approval,” he said.
The memorandum lists the following incentives for banks and QBs: revaluation of premises, improvements and equipment; staggered booking of unbooked valuation reserves over a maximum period of five years; temporary relief from compliance with capital adequacy ratio (CAR) and/or maximum period for amortization of goodwill; conversion/upgrading of head offices, branches, and other offices; condonation of liquidated damages/penalties on loan arrearages to the BSP; and relocation of branches/offices within one year in cases of duplication of branches in certain areas.
Also included are an installment payment plan for outstanding penalties in legal reserve deficiencies and interest on overdrafts with the BSP over a one-year period; a reasonable period to comply with real estate loan limits; restructuring past due obligations with the BSP over a 10-year period; concurrent officership between a merged or consolidated bank or financial institution (Fl) and another bank/FI, and concurrent directorship between banks; and continued effectivity of the right or privilege under a rehabilitation program or any special authority granted by the Monetary Board.