• PH targets 2 more qualified Asean bank agreements

    0

    The Bangko Sentral ng Pilipinas (BSP) is looking to forge bilateral agreements with two more central banks in the Association of Southeast Asian Nations (Asean) that will allow qualified commercial banks to operate subsidiaries in each other’s markets.

    The BSP had signed such a high-level agreement with Bank Negara Malaysia governing qualified Asean banks (QAB) in accordance with the Asean Banking Integration Framework (ABIF).

    ABIF is designed to realize the vision of “One Asean Community” with qualified banks as vehicles for maximizing the vast trade and investment potential in the region.

    The Philippines now looks forward to finalizing “at least two more [similar]agreements as early as next month,” BSP Governor Amando Tetangco Jr. said.

    Tetangco was speaking before members of the Bankers Institute of the Philippines (BAIPHIL) at the recently concluded 29th National Convention held in Tagaytay City on March 11. The BSP released the transcript to news organizations only on Tuesday, March 21.

    Qualified banks are well-managed banks headquartered in the region and majority owned by 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.

    In line with the ABIF is a bilateral agreement between two Asean monetary authorities, called heads of agreement or HoA.

    In March last year, the BSP and Bank Negara Malaysia signed such an agreement, allowing qualified banks from Malaysia to enter the Philippines and be regulated under applicable BSP regulations within the legal framework defined under Republic Act 10641.

    Tetangco did not specify at the BAIPHIL event which Asean economies were being considered by the BSP for new agreements. In another occasion last year, however, he mentioned the Philippine monetary authority would initiate talks with the central banks of Thailand and Indonesia—the Bank of Thailand and Otoritas Jasa Keuangan, the Indonesian Financial Services Authority.

    Under ABIF, while the bilateral agreement outlines market access and operational flexibilities given to qualified banks from each jurisdiction into the other, the banks are expected to operate under prevailing laws and regulations in the markets involved.

    A key provision of the HoA allows up to three qualified banks from each jurisdiction to operate in a neighboring country as subsidiaries in line with the principle of reciprocity.

    “Ladies and gentlemen. ABIF is now unfolding–it provides us with opportunities. The strategic issue therefore is how you will now operate given that regional integration is upon us,” Tetangco said.

    Other opportunities

    Tetangco said there is a specific upside for the Philippines and Philippine banks under an integrated Asean.
    “From the perspective of macroeconomic activity, there is significant room for the Philippines to move up because we have arguably more stable fundamentals than most, if not the rest, of the region,” he said.

    In the financial markets, the Philippines can target a larger portion of Asean savings as the country lags behind Indonesia, Malaysia, Singapore and Thailand.

    The same is true for external trade, another potential growth area for the Philippines, Tetangco added.

    In both portfolio investments and in external trade, Tetangco pointed out that Philippine banks have a clear role to play as an intermediary, paying/collecting agent and investment advisor.

    “Of course, the possibilities are not limited to those within the purview of the banking system. Taking in more market share within Asean means that we move forward to develop our capital market and to institutionalize cross-border payments and settlement arrangements,” he concluded.

    Share.
    loading...
    Loading...

    Please follow our commenting guidelines.

    Comments are closed.