House approves entry of foreign banks

MANILA, Philippines - The House of Representatives has approved on third and final reading the bill allowing the full entry of foreign banks in the Philippines. Lawmakers said this would allow the country to maximize the benefits from the upcoming integration of the ASEAN member-states. 

Voting 198-0, lawmakers passed on final reading Monday night House Bill 3984 or the proposed “Act Allowing Full Entry of Foreign Banks in the Philippines.” 

The measure was authored by Reps. Nelson Collantes of Batangas, chairman of the House committee on banks and financial intermediaries; Teodorico Haresco (Aklan); Gustavo Tambunting (Parañaque); Henry Oaminal (Misamis Occidental); Jorge Almonte (Misamis Occidental); Arthur Yap (Bohol); Ferdinand Hernandez (South Cotabato); Julieta Cortuna (A-Teacher party list); and Samuel Pagdilao (ACT-CIS party list). 

They said the country’s banking sector must be further liberalized as the integration of Asean states starting next year will include the full implementation of the Asean Banking Integration Framework in 2020. 

The passage of the measure came as the House started this week plenary discussions on Resolution of Both Houses No. 1, which seeks to ease restrictions in the economic provisions of the Constitution. 

The removal of the remaining barriers to foreign banks is “a step ahead and position itself ready to take advantage of the benefits of this economic integration through the further opening of the banking industry to foreign banks,” the bill stated. 

Under the bill, foreign banks – as may be authorized by the Monetary Board – may operate in the country by acquiring, purchasing or owning up to 100 percent of the voting stock of an existing bank; by investing in up to 100 percent of the voting stock of a new banking subsidiary incorporated under the country’s laws; and by establishing branches with full banking authority. 

It also removed the restriction that allowed only those among the top 150 foreign banks to enter the country. The measure said any foreign bank may establish business in the country provided that they are “established, reputable and financially sound.”

Collantes said the measure was aimed at further strengthening the country’s financial system in the face of globalization and regionalization. 

“This opens up opportunities for weak banks to exit from the system through sale of their voting stock or equity to foreign banks which are expected to possess sufficient resources for such purpose,” Collantes said.