BSP encourages more bank mergers

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) said it would continue to encourage small lenders to merge and consolidate to further strengthen the country’s banking system.

BSP Governor Amando Tetangco Jr. said the bank regulator would continue to offer incentives for weaker banks to consolidate, merge, and beef up their capital base.

“In this manner, the banking system will be strengthened and bank closures will be minimized. On the issue of bank closures, it is important to consider this in the context of protecting and enhancing service to the public,” he said.

Latest data from the central bank showed the number of big and small banks operating in the country reached 635 as of the end of September last year or 17 short of the 652 recorded in the same month of 2014.  The decline was due to the continued consolidation of banks as well as the exit of weaker players in the banking system.

The number of big banks or universal and commercial banks increased to 37 in the first nine months of 2015 from 36 the previous year. These comprised 17 private domestic banks, 15 foreign bank branches, three government banks, and two foreign bank subsidiaries.

President Aquino signed Republic Act No. 10641 in July last year, which effectively amended the foreign banks law by removing the limit of foreign banks in the country earlier set at only 10.

 Under the new law, foreign banks are allowed to own as much as 100 percent of any local bank.

So far, the BSP has allowed six more foreign banks to set up shop in the Philippines. These include Sumitomo Mitsui of Japan, Cathay United Bank of Taiwan, the Industrial Bank of Korea, Seoul-based Shinhan Bank, Yuanta Bank of Taiwan, and United Overseas Bank Limited (UOB) of Singapore.

The BSP said the number of thrift banks was unchanged at 69 from January to September last year. However, the number of rural and cooperative banks decreased to 529.

The Monetary Board ordered the closure of 14 rural banks that were placed under the supervision of the state-run Philippine Deposit Insurance Corp. (PDIC) in 2015.