• MB relaxes guidelines on banks’ branch expansion

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    BANKS may now put up branches in strategic locations more easily after the Monetary Board (MB) approved the amendments to the guidelines on the establishment of branches.

    In a statement over the weekend, the Bangko Sentral ng Pilipinas (BSP) said the amendments to the guidelines will provide banks with more flexibility in expanding their branch network to strategic locations, “consistent with the BSP’s policy of promoting a competitive banking environment and ease of doing business.”

    The BSP explained that the new regulation removes the use of theoretical capital as well as the combined capital requirement tied to geographic location in evaluating branch applications since the branch network size and location of head office are already embedded in the latest minimum capital requirement for banks.

    The MB also reaffirmed the general thrust of allowing banks to establish branches anywhere in the Philippines, including in the cities previously considered as restricted areas, namely, Makati, Mandaluyong, Manila, Parañaque, Pasay, Pasig, Quezon and San Juan.

    “The move is aligned with the initiatives on banking system liberalization which include the removal of the branch moratorium in restricted areas and the gradual lifting of the suspension on the establishment of new domestic banks,” according to the BSP.

    Anchored on their overall business model and strategic direction, smaller banks may now establish branches in Metro Manila subject to higher capitalization and special licensing fee if said branches are to be located in the cities previously considered as restricted areas, it added.

    “The policy initiative is aligned with the BSP’s banking reform agenda that is anchored on the promotion of sound risk management systems and financial stability,” it said.

    Latest data show that as of the first quarter of 2016, the number of banking institutions (head offices) fell to 622 from the year- and quarter- ago levels of 646 and 632, respectively, indicating continued consolidation of banks as well as the exit of weaker players from the banking system.

    By banking classification, banks (head offices) consisted of 41 U/KBs (universal and commercial banks), 66 thrift banks (TBs), and 515 rural banks (RBs).

    Meanwhile, the operating network (head offices and branches/agencies) of the banking system expanded to 10,849 offices in the first quarter of 2016 from 10,456 offices during the same period in the previous year and 10,756 offices in the fourth quarter of 2015, mainly due to the increase in the branches/agencies of U/KBs, TBs and RBs.

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