New measure on entry of foreign banks to strengthen local banks

MANILA, Philippines - The new law allowing the full entry of foreign banks will strenghten domestic  banks and increase investments as well, the Bangko Sentral ng Pilipinas (BSP) said.

“The economic benefits that can be derived from a further opening of the Philippine banking system to foreign banks are clear: augmentation of financial resources through increased foreign direct investments that will be available to the domestic banking market, transfer of technology, enhancement of human resource skills,” BSP Governor Amando M. Tetangco Jr. said in a text message to reporters.

 “These will help further strengthen the banking system and make our banks better-positioned in the face of ABIF (ASEAN Banking Integration Framework). The liberalized system is also expected to generate increased foreign direct investments in the Philippines, including in the manufacturing sector that will create more jobs and raise output,” he said.

Malacanang on Sunday announced  the signing of RA 10641  or ‘’An Act Allowing the Full Entry of Foreign Banks in the Philippines.’’

“The liberalization of the banking system is part of the reform agenda on capital and financial market development that is designed to create an efficient working environment where the needs of savers and users of funds could be addressed, with the larger view of our pursuit of financial stability,” Tetangco said.

RA 10641 now allows foreign banks to acquire up to 100 percent of a local lender or to fully own a new banking subsidiary, amending a previous provision that only permits foreign banks to own up to 60 percent of any Philippine bank’s voting stock.

This new law also amends a previous law that limits the number of foreign banks in the country to 10.