BSP to closely monitor foreign ownership of banks

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) is closely monitoring the compliance of banks on the foreign ownership limit imposed on financial institutions.

BSP Deputy Governor Nestor Espenilla Jr. said in an interview that the central bank has issued Memorandum Order 2011–058 reminding all banks listed in the Philippine Stock Exchange (PSE) to comply with the bank regulator’s disclosure requirement.

Espenilla said all banks listed in the PSE should disclose the consolidated list of stockholders and their stockholdings, the ultimate beneficial owners of shares under PCD Nominee Corp. including those numbered, trust and custodian accounts.

He pointed out that Section X126 of the Manual of Regulations for Banks as amended by Circular 718 issued last April 26 states that foreign individuals and non-bank corporations may own or control up to 40 percent of the voting stock of a domestic bank provided the percentage of foreign-owned voting stock in a bank shall be determined by the citizenship of the individual stockholders in that bank.

The law also states that qualified foreign banks may own or control up to 60 percent of the voting stock of a domestic bank.

Likewise, a Filipino individual and a domestic non-bank corporation may each own up to 40 percent of the voting stock of a domestic bank. There shall be no ceiling on the aggregate ownership by such individuals and non-bank corporations in a domestic bank.

Espenilla said some banks that have been remiss in their duties in complying with the disclosure requirement would be dealt with accordingly.

“Failure to strictly comply with this requirement shall subject the bank to the corresponding sanctions provided in the regulation,” he warned.

Banks whose shares are being traded at the PSE include AsiaTrust, BDO Universal Bank, Bank of the Philippine Islands, Chinabank, China Trust, Citystate Savings Bank, Export Bank, the Metrobank Group, PBCom, Philippine National Bank, PhilTrust, Rizal Commercial Banking Corp., Security Bank and Union Bank.

The total number of banks operating in the Philippines went down in the first half of the year as the BSP stepped up its campaign against problematic banks while major players in the banking industry continued to consolidate amid the challenging global environment.

Data released by the central bank showed that the number of banks stood at 739 in the first semester of the year, or 19 banks fewer than the 758 as of end-December last year. The number of banks was also 34 less than the 773 banks that operated in the same period last year.

The BSP attributed the decline in the number of banks to the exit of weak players in the banking system as well as the continued mergers and consolidation of major players.

Data showed that the number of universal and commercial banks was steady at 38 while the number of thrift banks was reduced by one bank to 72 as of end-June from 73 as of end-December last year.

On the other hand, the number of rural banks decreased to 629 in the first six months of the year compared to 661 in the same period last year and 647 as of end-December due primarily to the closure of weaker banks.