BSP expands investor list for ailing co-op banks

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) has expanded the list of eligible investors that can inject capital to ailing cooperative banks under an incentive program of the central bank.

This, after the BSP, together with the Philippine Deposit Insurance Corp. and the Land Bank of the Philippines, have revived the Strengthening Program for Cooperative Banks (SPCB), renamed as SPCB Plus.

The BSP said the revival comes with amendments and enhancements to better encourage mergers and consolidations with or acquisitions of cooperative banks.

For one, the SPCB Plus now allows “strong and well-managed” thrift and rural banks as strategic third-party investors in addition to commercial banks, primary cooperatives, and federations of cooperatives.

Previously, only thrift and rural banks at least majority owned by commercial banks, primary cooperatives or federation cooperatives were allowed to avail of incentives under the SPCB.

The BSP said the enhancement will “further strengthen the cooperative banking system, boost confidence in the banking system, and improve the delivery of financial services to the countryside and rural communities.”

Despite making up only a small fraction of the banking industry, cooperative banks are frontrunners in providing financial servies to primary and federation cooperatives and their members who have limited access to banking services.

The original SPCB, launched in November 2011 and expired in August 2012, was introduced to improve the cooperative banking industry, a key to achieving an inclusive financial system.

The SPCB Plus, will be in place until Sept. 17, 2014, the BSP said.

“The SPCB Plus offers a variety of financial and regulatory reliefs and incentives to improve the prospects for success of new banking partnerships,” the central bank stressed.

Under the program, financial assistance may be extended to augment capital shortfalls. At the same time, regulatory reliefs and branching incentives are available for eligible strategic third-party investors (STPIs).

“The SPCB Plus expects eligible STPIs not only to sustain and strengthen the financial condition of surviving banks but also to improve their quality of corporate governance and management,” the BSP said.

“Strong expressions of interest have been received from a number of players in the industry to take part in the SPCB Plus,” the central bank added.

The BSP further said there have already been five applications involving 19 cooperative banks received as of October.