MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) is offering perks to players who take part in the consolidation of Philippine banks to further enhance the competitiveness of the industry.
BSP Deputy Governor Nestor Espenilla Jr. issued Memorandum M-2016-023 laying down regulatory incentives for mergers and consolidations, as well as acquisition of majority or all of the outstanding shares of stock of a bank or quasi-bank.
“Concerned banks or quasi banks may request regulatory incentives that are responsive to their specific needs, and reasonable given the attendant circumstances,” he stated in the memo.
The BSP official said the regulator has been promoting mergers, consolidations, and acquisitions of majority or all of the outstanding shares of stock of a bank or quasi bank to strengthen the financial capabilities and enhance the overall competitiveness of the industry.
Possible incentives, Espenilla said, include revaluation of premises, improvements, and equipment as well as staggered booking of unbooked valuation reserves over a maximum period of five years.
He said participants would also be entitled to temporary relief from compliance with capital adequacy ratio (CAR) and maximum period for amortization of goodwill.
Likewise, concerned banks and quasi banks could convert or upgrade their head offices, branches as well as relocate their branches or offices within one year in cases of duplication of branches in certain areas.
Espenilla said participants are also entitled to the condonation of liquidated damages or penalties on loan arrearages to the BSP as well as the restructuring of past due obligations with the central bank over a 10-year period.
Incentives also include the installment payment of outstanding penalties in legal reserve deficiencies and interest on overdrafts with the BSP over a one-year period, as well as reasonable period to comply with real estate loan limits.
The BSP would also allow concurrent officership between a merged or consolidated bank or financial institution and another bank, as well as concurrent directorship between banks.
The perks also include the continued effectivity of right or privilege under a rehabilitation program or any special authority granted by the Monetary Board.
The BSP has ordered the closure of 22 problematic banks this year, seven more than the 14 banks shut down in 2015, as part of efforts to weed out weak players in the industry.
On the other hand, a total of nine foreign banks have entered the Philippines since former president Benigno Aquino III signed Republic Act 10641 lifting the previous limit set at only 10.
Source: http://www.philstar.com/business/2016/12/23/1655928/bank-mergers-acquisitions-get-bsp-perks
