BSP also expects the lenders to bring in FDI
More foreign banks may be expected to enter the liberalized Philippine banking industry this year and bring foreign direct investment (FDI) into the country, the central bank said.
Foreign banks may operate in the Philippines as a branch or a wholly owned subsidiary,
“There are more banks that have expressed interest to come to the Philippines. So I think there will be more, possibly this year,” Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr., told reporters in an interview late Monday.
Earlier, Tetangco said in a separate announcement six banks from Asia were interested in setting up operations in the Philippines, but did not identify the banks.
The banking sector began attracting foreign players after the RA 10641, or the Act Allowing the Full Entry of Foreign Banks in the Philippines, was passed in July 2014. The law 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.
Since the passage of the law, nine banks have entered the local banking scene.
Vehicle for FDI
Foreign banks provide competition to local lenders, but more than that, they also act as vehicles for FDI as “they help potential investors from their own jurisdictions to set up shop here,” Tetangco said.
“They not only serve their clients from their own country, they also serve local Filipino clients. So, as I was saying, this encourages greater competition in the banking system. So with competition you can expect better services, better pricing for their products,” he said.
“But before that, they are also our source of information for foreign investors. In fact, they conduct investors’ briefings and investment seminars dealing with conditions as well as opportunities, economic and financial opportunities in the Philippines,” he added.
In accepting foreign banks’ applications for entry into the Philippine market, the BSP takes into consideration strategic relationships and reciprocity rights.
The BSP also requires a separate assessment of the applicants by bank regulators in their respective countries of origin.