BSP issues new rules on bank branch relocation

MANILA, Philippines - Banks intending to relocate their branches in Metro Manila would be required to pay special licensing fees of up to P20 million per branch, the Bangko Sentral ng Pilipinas said yesterday.

In Circular No. 847, the BSP said banks planning to move their head offices, branches or other banking offices, and approved but unopened branches to the cities of Makati, Mandaluyong, Manila, Paranaque, Pasay, Pasig, Quezon and San Juan would have to pay a special licensing fee.

This fee amounts to P20 million per branch for universal and commercial banks, and P15 million per office for thrift banks. The same fees would be applied to regular branch applications for the eight cities in Metro Manila or the so-called “restricted areas”, based on the BSP’s Manual of Regulations for Banks.

When relocating branches or banking offices, banks are required to give a notice of relocation signed by its president and accompanied by a certified true copy of the board’s resolution for said move, according to the circular.

The notice, which must be submitted to the BSP’s Supervision and Examination Sector, should also include information on the new site for the branch, the timetable for the relocation, and the date and manner of payment of the licensing fee.

Those covered by the special licensing fees are branches outside the eight Metro Manila cities to be relocated in the restricted areas.

“Relocation of branches/OBO (other banking offices) beyond one year shall be deemed as permanent closure and surrender of license of the branch/OBO at the old site, and the opening of a branch/OBO at the new site shall be deemed as an establishment of a new branch/OBO,” the BSP said.

For the transfer of head offices to another site, banks are required to get an approval from the BSP’s policymaking Monetary Board.

The BSP said banks are allowed to relocate their head offices anywhere, provided that the social licensing fees would be paid when transferring an office to restricted areas.

The circular, signed last Aug. 28 by BSP Deputy Governor Nestor A. Espenilla Jr., would take effect 15 days after publication in a newspaper of general circulation.

The central bank last July 1 lifted branching restrictions in Metro Manila, earlier put in place to avoid the high concentration of banks in the cities of Makati, Mandaluyong, Manila, Parañaque, Pasay, Pasig, Quezon and San Juan.

The restriction was put in place to encourage banks to expand in provinces and reach the unbanked and underbanked population in the country.

Latest data from the BSP show that the number of head offices fell to 667 in end-March from 687 in the same period last year. The decrease is due to the merger and consolidation of banks, as well as foreclosures of small banks as weaker players exit the banking system.

Despite the decrease in the number of banks, their bank branches continued to expand to 9,353 in the first quarter from 8,790 in the same period last year.

The rise in the number of branches was largely driven by universal banks which have been aggressively expanding in and out of the National Capital Region partly due to their preparation for the region’s banking integration.