Mactan Island, Cebu: The Philippines and Malaysia took the final step to allow qualified commercial banks to operate subsidiaries in each other’s markets.
On Thursday, the Bangko Sentral ng Pilipinas (BSP) and the Bank Negara Malaysia signed the Declaration of Conclusion of Negotiations (DCN) on the entry of Qualified Asean Banks (QABs) between the two countries.
Qualified banks are well-managed banks headquartered in the region and majority owned by Association of Southeast Asian Nations (Asean) nationals. Banks that apply for QAB status must be endorsed by the home country regulator and may be accepted by a host country regulator based on the bilateral agreement.
Signing the declaration were BSP Governor Amando Tetangco Jr. and BNM Governor Muhammad bin Ibrahim.
“Finalizing this agreement between the BSP and BNM is an important step towards achieving the goal of the
Asean Banking Integration Framework (ABIF) to enhance intra-regional trade and inclusive growth through QABs operating in host Asean jurisdictions” said Tetangco.
Tetangco said the DCN lays down the rules for the QABs between the two jurisdictions, an important step toward uncovering the synergies of cross-border finance between the Philippines and Malaysia.
“I do look forward to a stronger and more vibrant interaction between our two systems that would unlock the promised benefits of ABIF,” he said.
ABIF provides the general principles for the entry of QABs from one Asean member-state to another.
The agreement signed by the BSP and BNM reflects the specific conditions for QABs from each country to enter the other in a manner consistent with global banking standards and the host’s regulations.
“The benefits of a harmonized Asean financial market are often cited and having QABs allows us to reap these benefits in concrete terms. The significance of this DCN then is that we are essentially opening to the two jurisdictions the envisioned upside of stronger cross-border finance,” Tetangco pointed out.
According to the BSP, the ABIF-related agreement between the BSP and BNM will eventually be reflected in the respective Schedule of Commitment (SoC) of each country.
The SoC reflects the final offers that each country makes to a specific counterpart and offers that are made available to all member-states, it said.
Initiates talks with Thailand
The BSP also initiated talks with the Bank of Thailand (BoT) by signing a Letter of Intent to begin bilateral discussions in line with the ABIF.
The document was signed by BSP’s Tetangco and BoT Governor Veerathai Santiprabhob.
“This document formalizes our intention to eventually craft the specific provisions that will govern the entry of Qualified Asean Banks between our two countries,” Tetangco said.
Bilateral discussion allows us to explore opportunities as well as common interests and the BSP looks forward to having vibrant discussions with our colleagues from the BoT, he said.
The ABIF enjoins Asean-5 countries to hammer out at least one bilateral agreement with another Asean-5 counterpart by 2018. Asean-5 counts Indonesia, Malaysia, Philippines, Singapore and Thailand as members.
The framework also targets the conclusion or near conclusion of at least one bilateral agreement for each of the 10 Asean members by 2020.
Established 50 years ago, Asean groups Brunei, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam into a single trade block.