BSP stands firm on no new bank branches

The Banko Sentral ng Pilipinas (BSP) will still not issue new branch licenses as it continues to encourage mergers and acquisitions and forces banks which are unable to meet their new capitalization requirement to downgrade.

According to BSP Gov. Rafael B. Buenaventura, the BSP has to maintain its suspension policy for awhile because "we want big banks to instead acquire small banks."

Buenaventura argued that if the big banks want additional branches, "they can relocate the branches wherever they want."

In the same vein, the BSP is also getting tough on banks who are still not able to meet their new capital requirement.

According to Buenaventura, banks which have not met the increased capital requirement will have to downgrade.

Three banks which have reportedly been identified as having requested for a downgrade are the Tan Yu-owned Pan Asia Bank, the Nubla-family controlled Philippine Bank of Communications (PBCom) and the Bartolome-owned Urban Bank.

The BSP apparently is still not happy with the bank mergers it has been able to encourage. According to Buenaventura, the BSP still wants the big banks to continue to pursue smaller banks.

PBCom, for instance, was in earlier talks with Asian Bank for a merger but the talks eventually fell through due to the illness of the Nubla patriarch.

Metropolitan Bank and Trust Co. eventually won over Asian Bank and pushed it to merge with its subsidiary, Global Bank.

Pan Asia and Urban Bank were also in earlier merger talks but nothing came out of the negotiations.

The BSP had tried to give some leeway to banks who had not been able to meet the capitalization requirement in hope that they will eventually find a merger partner.

Unfortunately, the BSP now realizes that it must be tougher on the capitalization requirement and on granting branch licenses.