PDIC, BSP to harmonize bank merger rules

MANILA, Philippines - State-run Philippine Deposit Insurance Corp. (PDIC) has tied up with the Bangko Sentral ng Pilipinas (BSP) to expedite the evaluation process for mergers and acquisitions of banks to further strengthen the country’s financial system.

PDIC president Jose Nograles said that the agency and the central bank decided to harmonize their procedures for the evaluation of mergers and acquisition of banks and non-bank financial institutions.

“Stronger banks are in the position to provide better financing products and services to their clientele. This is why we are pleased that PDIC and the BSP have agreed to harmonize merger and consolidation procedures and conduct such in an expeditious manner,” Nograles said. 

Nograles pointed out that PDIC remains committed to the long-term viability of financial institutions as a means to maintain faith and confident in the country’s financial system through the strengthening of the financial sector through mergers and acquisition.

“When financial institutions like banks merge or consolidate, they attain economies of scale, achieve higher lending capacities, diversify risks, and improve the quality of their services,” he said.

PDIC and the BSP recently signed a memorandum of agreement to streamline and expedite the evaluation process for mergers and acquisitions of banks and non-bank financial institutions with quasi-banking license.

“PDIC has always been supportive of mergers and consolidations. This MOA is another step in encouraging bank mergers by simplifying the procedural requirements for their approval,” he said.

Under the MOA, Nograles explained that the review of applications for mergers and acquisitions by PDIC and BSP would be simultaneous instead of sequential.

“The internal working arrangement between PDIC and BSP will significantly reduce the time that banks will have to go through when they apply for mergers and consolidations,” the PDIC chief said.

Data from the BSP showed that the total resources of the banking system went up by 8.4 percent to P6 trillion as of end-June this year from P5.54 trillion as of end June last year.

Statistics showed that the total resources of universal and commercial banks increased by 8.8 percent to P5.29 trillion in the first semester from P4.86 trillion in the same period last year. It accounted for about 88 percent of the total resources of the banking system.

Total resources of thrift banks rose by 9.4 percent to P548.9 billion from P501.7 billion while that of rural banks retreated by 7.6 percent to P163.9 billion from P177.3 billion.