THE BANGKO SENTRAL ng Pilipinas (BSP) is looking to bring down the threshold for the transfer of shares of stocks that needs its approval to ensure “proper” and “fit” ownership of BSP-supervised financial institutions (BSFIs).
A Jan. 14 version of the draft circular posted on the central bank’s website also moved the authority to approve these transactions to the BSP from the Monetary Board.
Based on the proposal, the BSP is looking to define control of an enterprise when at least 10% of voting shares of a bank or a financial company is indirect or directly owned or held by an entity. This proposed threshold will be the basis for the transfer of shares of stocks that will need prior approval from the BSP once the circular is approved.
The threshold is currently set at 20% under the BSP’s Manuals of Regulations for Banks and Non-bank Financial Institutions.
“The BSP deems that even at 10%, it is considered significant such that it needs BSP approval,” BSP Deputy Governor Chuchi G. Fonacier said in a text message.
“The Bangko Sentral recognizes the importance of public’s trust in promoting the safety and soundness of individual financial institutions and the financial system as a whole,” the policy statement of the draft circular read.
“It is in this light that it is issuing regulations on the transfer of shares of stocks in BSFIs and the qualifications of holders of said shares to ensure that only individuals and corporations as well as their ultimate beneficial owner/s who are fit and proper shall be allowed to own a substantial or controlling interest in a bank,” it added.
The draft circular likewise says prior approval from the BSP is needed for these transactions. Under current regulations, these are approved by the Monetary Board.
Ms. Fonacier said if the proposal is approved, the BSP Financial Supervision Sector will be in charge of the approval of the transfer of shares of stocks.
Stakeholders are given until Jan. 22 to give their feedback on the draft circular.
An analyst said the proposal would help protect both the financial system and the public.
“This move would further promote further financial stability as well as greater protection of the depositing public, to ensure stronger banking system and also fulfill the mandate of sustainable economic growth over the long-term,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message.
The central bank has said it will monitor financial stability risks in the banking system amid the current crisis by managing potential systemic risks or events even at the company level. — L.W.T. Noble