The Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance Corp. (PDIC) over the weekend announced the extension of the Strengthening Program for Rural Banks (SPRB) Plus that aims to strengthen the country’s banking system
and to minimize bank closures.
In a joint statement, BSP and PDIC said that the extension of the program from December 31, 2013, until December 31, 2014, includes certain amendments and enhancement to encourage more mergers, consolidations and acquisition of eligible rural banks and thrift banks by strategic third party investors (STPIs).
SPRB Plus is an enhanced version of the original SPRB which was launched in 2010 exclusively for rural banks. Its scope was broadened and enhancements were made under the SPRB Plus such as inclusion of thrift banks, in addition to rural banks, as among the eligible banks as well as the inclusion of thrift banks universal and commercial banks (U/KBs), nonbank corporations and group of companies as eligible STPIs.
BSP and PDIC noted that among the approved amendments and enhancements include the relaxation of the required ownership control in an eligible bank by an eligible STPI from at least 67 percent to least 60 percent of the outstanding capital stock of the eligible bank, to align with the provision of BSP Circular 809 on the rules and regulations implementing Republic Act 10574 of the act allowing the infusion of foreign equity in the capital of rural banks.
Meanwhile, financial assistance from PDIC may now also be in the form of either a combination of preferred shares and direct loan, or direct loan only.
“Furthermore, as support to banks affected by Super Typhoon Yolanda, the amount of the preferred shares component of the PDIC financial assistance is increased from 50 percent to 100 percent of the required additional capital to restore the eligible banks’ capital adequacy ratio to a minimum 10 percent,” the joint statement stated.
On the other hand, BSP and PDIC said that as of December 31, 2013, five merger/consolidation applications involving 10 banks have been approved by the PDIC and are being processed by the BSP. BSP and PDIC added that there are two applications for consolidation/acquisition that are in the pipeline.