The Bangko Sentral ng Pilipinas (BSP) will initiate talks with the central banks of Thailand and Indonesia on bilateral agreements allowing Qualified Asean Banks (QAB) to operate subsidiaries in each other’s markets.
“I am pleased to report that we are about to initiate formal discussions with the Bank of Thailand and with the OJK of Indonesia under the ABIF guidelines,” BSP Governor Amando Tetangco Jr. said, referring to Otoritas Jasa Keuangan, the Indonesian Financial Services Authority. He was speaking before a general assembly of the Bankers Association of the Philippines (BAP) earlier this week.
In line with the Asean Banking Integration Framework (ABIF) is a bilateral agreement between two Association of Southeast Asian Nations (Asean) monetary authorities, called heads of agreement or HoA.
ABIF is designed to realize the vision of “One Asean Community” with QABs as vehicles for maximizing the vast trade and investment potential in the region.
While the bilateral agreement outlines market access and operational flexibilities given to qualified banks from each jurisdiction into the other, the banks are expected to operate under prevailing laws and regulations in the markets involved.
A key provision of the HoA allows up to three qualified banks from each jurisdiction to operate in a neighboring country as subsidiaries in line with the principle of reciprocity, according to the central bank.
In March this year, the BSP and Bank Negara Malaysia have signed an HoA, allowing qualified banks from Malaysia to enter the Philippines and be regulated under applicable BSP regulations within the legal framework defined under Republic Act 10641.
QABs are well-managed banks headquartered in the region and majority owned by Asean nationals.
Banks that apply for QAB status must be endorsed by the home country regulator and may be accepted by a host country regulator based on the bilateral agreement.