The House of Representatives has approved a bill that will allow the full entry of foreign banks even if the chamber is yet to tackle in plenary a measure that seeks to amend the Constitution.
It gave its nod to House Bill (HB) 984 or the Act Allowing Full Entry of Foreign Banks in the Philippines, which it passed on third reading via a 198-0 vote late Monday night.
HB 3984 allows the Monetary Board to authorize foreign banks to operate in the Philippine banking system by 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 by establishing branches with full banking authority.
Under the Constitution, foreigners cannot own more than 40 percent of public utilities, including banks. This restriction provided under the 1987 Philippine Constitution is what House Resolution 1 seeks to remove by adding the phrase “unless otherwise provided for by law.”
Speaker Feliciano Belmonte Jr., author of House Resolution 1, sees the move as a tool for stirring foreign investments and generating employment.
HB 3984 significantly relaxed the constitutional restriction by stating that the Monetary Board will only have to ensure that at least 70 percent of the resources or assets of the entire banking system is held by domestic banks that are majority-owned by Filipinos.
For a foreign bank to enter the country, it should be widely known and publicly listed. Its capital should equal that required for domestic banks.
Under HB 3984, foreign banks will have the same functions and privileges as local banks and will be subject to the same limitations imposed by the Monetary Board.