Discussions that will allow qualified commercial banks from Philippines to operate subsidiaries in Indonesia and Thailand are still ongoing, the chief of the Bangko Sentral ng Pilipinas (BSP) said on Tuesday.
“We are discussing now … the bilateral agreements which should pave the way for the entry of QABs,” Bangko Sentral Governor Nestor Espenilla Jr. announced during the Management Association of the Philippines Economic Briefing 2018 and General Membership Meeting in Makati City.
QABs or Qualified Asean Banks are defined as “well-managed banks headquartered in the Association of Southeast Asian Nations (Asean) that are majority owned by Asean nationals.”
Banks that apply for QAB status must be endorsed by their home country regulators and can be accepted by the host country regulator based on a bilateral agreement.
In line with the Asean Banking Integration Framework, bilateral agreements between two Asean monetary authorities are called heads of agreement or HOAs.
A HOA signed by the BSP and Bank Negara Malaysia in March 2016 paved the way for the signing of the Declaration of Conclusion of Negotiations in April 2017.
In his speech, Espenilla said the central bank was strategically opening up the banking system to competition in line with the 2014 enactment of the Foreign Banks Liberalization Law.
The Monetary Board, he noted, has so far approved 12 foreign bank applications and five representative offices.
“Similarly, our flexible approach to financial innovation encourage competition from new players, including fintech companies,” he said.
“We believe that regulations should not stand in the way of market developments.”
Overall, Espenilla said the Philippine banking system had capped 2017 with sustained growth in assets, deposits and capital, accompanied by improved asset quality, firm liquidity position and strong capitalization.
“The Philippine banking system remains sound and stable. We expect these improvements to continue,” he said.