Regulators okay new program to boost rural banking sector

MANILA, Philippines - Regulators have approved an enhanced program meant to strengthen country-side banking, expanding its coverage to cover thrift banks and allowing larger universal and commercial banks to participate, a statement said yesterday.

“The Bangko Sentral ng Pilipinas (BSP) and the Philippine Deposit Insurance Corp. (PDIC) recently signed the supplemental agreement to implement the Strengthening Program for Rural Banks (SPRB) Plus to strengthen the thrift and rural banking industry to effectively serve the country-side and improve the delivery of financial services to rural communities,” BSP and PDIC said in a joint statement.

SPRB, which ran for two years and expired yesterday, was meant to strengthen the rural banking system through mergers and consolidations among rural banks. Under SPRB Plus, the so-called “white knights” may now include universal, commercial, thrift or rural banks which are “strong and well-managed.”

“Non-bank corporations may also qualify as white knights,” the statement said.

Incentives ranging from waiving of branch licensing fees to lifting of branching restrictions will be given to acquiring banks, the statement said. Extension of financial assistance in cash and equity, however, will only be limited to investing thrift and rural banks.

Additional branching license outside of Metro Manila will also be granted to banks for every three ailing institutions they acquire, the statement said.

Remaining funds from the SPRB worth P5 billion will be used to fund SPRB Plus.

PDIC president Valentin Araneta told The STAR in a text message there are still 18 pending applications for merger and consolidation under the original program.

“Five applications have been approved by the PDIC Board involving 10 rural banks. Two applications involving four rural banks are currently being evaluated,” Araneta said.

A target number of consolidations was not set under the first SPRB, but “the objective was to encourage as many banks as possible,” Rural Bankers Association of the Philippines (RBAP) executive director Vicente Mendoza said in a text message.