PHILIPPINE BANKS are seen to remain resilient despite increased competition from new foreign players entering the country as the homegrown lenders enjoy the “healthiest” profiles across Southeast Asia, a central bank official said.

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi G. Fonacier said at least eight more foreign banks are looking to venture into the Philippine market, although domestic players are not expected to be threatened by their presence should they set up operations here.

“Philippine banks have the potential to compete in a regional setting as they are among the healthiest in the region. Banks have strong balance sheet with adequate buffer for losses,” Ms. Fonacier said in a speech last week, a copy of which was sent to reporters.

International banks — particularly those from other Southeast Asian countries — are expected to flock to the Philippines as they seek to cash in on the robust economic momentum here, with upbeat consumption driving domestic prospects.

Ten new global lenders have entered the Philippine market over the last two years following the passage of Republic Act 10641, which lifted the previous cap on the number of offshore players that can operate in the economy at a given time.  

Ms. Fonacier said more foreign banks are bullish about setting up their operations here, supported by the banking integration agreement among member-states of the Association of Southeast Asian Nations (ASEAN).

Of the eight live inquiries, two banks are from within the ASEAN, the central bank official said.

The ASEAN Banking Integration Framework was first endorsed in December 2014, which seeks to allow qualified banks to operate freely across member-economies in the region.

 Ms. Fonacier said the BSP is “on track” with finalizing bilateral deals with the nine other ASEAN member-states which are due by 2020. Authorities from the Philippines have finished discussions with their Malaysian counterparts, while negotiations are ongoing with the Bank of Thailand and the Otoritas Jasa Keuangan.

The central bank welcomes greater presence of foreign banks as these are expected to attract more foreign direct investments, offer a wider array of financial products and services, and open up job opportunities for Filipinos, among other benefits.

“While we are aware of the risks associated with banking integration, such as contagion, as well as financial and macroeconomic instability, we are confident that the Philippines is ready for integration and is able to manage and deal with potential risks,” Ms. Fonacier added.

Local banks stand well-capitalized against potential write-offs, and hold a minimal share of soured debts despite double-digit increases in total loans granted.

Stricter rules on risk management and corporate governance are likewise in place to keep the regulator in close watch of bank operations.

RELIEF
Separately, the central bank announced that it will be extending temporary relief measures to banks and financial entities in areas ruined by tropical storm Maring which hit parts of Metro Manila, Central Luzon, and Calabarzon in September.

Thrift, rural, and cooperative banks are allowed to exclude outstanding loans incurred by borrowers in the covered areas in computing their past due ratios, provided that such borrowings are restructured or given relief, the BSP said over the weekend.

No fines will also be imposed for delayed submissions of regulatory reports to the central bank. — Melissa Luz T. Lopez