The central bank said its policy-making Monetary Board has made further adjustments to its foreign currency regulations to align them with the more liberalized banking industry, which now allows full entry of foreign lenders into the Philippines.
In a statement on Wednesday, the Bangko Sentral ng Pilipinas (BSP) announced the approval of the amendments to the Manual of Regulations on Foreign Exchange Transactions (FX Manual) to align the same with the provisions of Republic Act (RA) 10641 (An Act allowing the Full entry of Foreign Banks in the Philippines) and BSP Circular 858 implementing the said law.
The BSP said the approved policy changes mainly involved the inclusion of an express provision that the foreign exchange funding for permanently assigned capital of foreign bank branches must be inwardly remitted and converted to pesos at the exchange rate prevailing at the time of remittance, pursuant to the pertinent provisions of the Manual of Regulations for Banks (MORB).
The use of a general reference to the use of MORB, instead of citing RA 7721 and RA 10641 or the specific provisions of the MORB, is also included in the amendments.
Lastly, the BSP said changes also involved a revision of the definitions of “unimpaired capital of a local bank,” “unimpaired capital of foreign bank branches,” and “unimpaired capital of foreign bank subsidiaries” as contained in the MORB.
BSP Governor Amando Tetangco Jr., affirmed that the continuing review of forex regulations is consistent with “the BSP’s commitment to maintain a safe and sound financial system, a stable FX market, and an appropriate monetary policy; and other applicable laws.”
The banking sector began attracting foreign players after the country passed Republic 10641 in July 2014, which 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.
That allowed foreign banks to apply for them to operate in the Philippines either as a branch or as a wholly owned subsidiary.
Nine foreign banks have since been given the green light to take over a local bank or set up a branch in the country.