The House of Representatives has allowed the full entry of foreign banks in the country pending plenary debates on the measure amending the 1987 Philippine Constitution.
The door was opened to foreign banks by the Commitee Report on House Bill 3984 and Senate Bill 2159 or the Act Allowing Full Entry of Foreign Banks in the Philippines, which was ratified by Congress on Wednesday during the last session day of the Second Regular Session of the 16th Congress.
The Act provides that the Monetary Board may authorize foreign banks to operate in the Philippine banking system through: acquiring, purchasing or owning up to 100 percent of the voting stock of an existing bank; investing in up to 100 percent of the voting stock of a new banking subsidiary incorporated under the laws of the Philippines; and establishing branches with full banking authority.
Under the 1987 Philippine Constitution, foreigners cannot own more than 40 percent of public utilities, including banks.
This restriction is what House Resolution 1 seeks to remove by adding the phrase “unless otherwise provided for by law” after the phrase that provides the restriction.
House Speaker Feliciano Belmonte Jr. of Quezon City , the author of House Resolution 1, sees the move as a tool for stirring foreign investments and generating employment.
The measure significantly relaxed such constitutional restriction by stating that the Monetary Board would only have to ensure that at least 60 percent of the resources or assets of the entire banking system are held by domestic banks, which are majority-owned by Filipinos.
The Act also provides that the Monetary Board should allow established, reputable and financially sound foreign banks to enter the Philippines based on certain criteria.
The criteria include: geographic representation and complementation, strategic trade and investment relationship between the Philippines and the country of incorporation of the foreign bank, demonstrated capacity, global reputation for financial innovations and stability in a competitive environment.