• BSP supports RB mergers

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    A PROGRESSIVE incentive program that will encourage mergers and consolidations among rural banks (RB) has been approved in principle by the Monetary Board of the Bangko Sentral ng Pilipinas (BSP)

    The Consolidation Program for Rural Banks (CPRB)—a program jointly conceptualized by the BSP, the Philippine Deposit Insurance Corp. (PDIC) and the Land Bank of the Philippines (LBP)—intends to promote mergers and consolidations among rural banks to bring about a less fragmented banking system by enabling them to improve financial strength, enhance viability, strengthen management and governance and expand market reach, among others.

    “The CPRB sprang from the need to strengthen the rural banking industry, in recognition of the major role that rural banks play in financial inclusion,” it stated.

    Currently, there are 512 rural banks operating across the country.

    The BSP also announced that in support of the CPRB, the Countryside Financial Institutions Enhancement Program (CFIEP), consistent with its mandate to improve the countryside financial institutions’ long-term sustainability and viability, will set aside P25 million to fund the implementation of the program.

    The fund will support financial advisory, business process improvement, and capacity-building support services, necessary to ensure the attainment of the program’s objectives.

    “On its part, the BSP will observe full flexibility in granting regulatory and other incentives allowable under existing baking laws and regulations including BSP Circular No. 237 as amended by Circular Nos. 771 dated 11 October 2012 and 494 dated 20 September 2005,” the BSP said.

    The central bank said the CPRB will be available for a period of two years from the signing of the memorandum of agreement among the BSP, the PDIC, and the LBP, which will contain the terms and conditions as well as other arrangements among the foregoing agencies in implementing the program.

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