BSP mulls incentives for mergers

The Bangko Sentral ng Pilipinas (BSP) is willing to grant incentives to encourage further consolidations in the country’s banking industry.

Under BSP Circular 237 or the governing regulations regarding mergers and acquisitions (M&As), incentive and privilege schemes are offered to banks that will merge or consolidate.

In addition, the BSP is prepared to offer a standby credit facility to help the surviving entity become even stronger.

BSP Governor Rafael B. Buenaventura said that the BSP is open to offering more incentives. "The regulations are still in place, and is still enforce," Buenaventura said.

He however admitted not having the details of the meeting last week since it was BSP Deputy Governor Amando M. Tetangco Jr. who presided in the meeting.

"It applies to any bank wanting to merge," he added.

When EIB appeared as the "white knight" to the closed Urban Bank in 2001, regulators offered a P1.5-billion standby facility and a P200-million special loan facility to EIB as the surviving entity.

The BSP was reacting to inquiries regarding the planned acquisition by Banco de Oro Universal Bank (BdO) of Export and Industry Bank (EIB).

It appears that after the exploratory meeting last week at the BSP headquarters in Manila, the BSP and the Philippine Deposit Insurance Corp. (PDIC) told the representatives of the two banks that government was prepared to work out a standby facility.

PDIC president Ricardo Tan also stressed that government was willing to offer incentives to merging banks. However, Tan preferred not to discuss details of the meeting as "it is too premature."

At the Philippine Stock Exchange (PSE), the EIB has been doing extremely well with stock prices increasing to nearly P1 per share in early March from P0.45 per share in late January.

Total shares traded reached some 305.1765 million in the first two months of 2005, valued at P238.352 million, substantially higher than the 66 million shares traded, valued at P64.957 million for the whole of 2004.