By Melissa Luz T. Lopez, Reporter

BSP sets requirements for entry of new lenders

Posted on February 19, 2016

THE BANGKO SENTRAL ng Pilipinas (BSP) has released official guidelines that will open the local banking industry to new players, detailing the process and the fees and requirements for putting up new banks and branches.

“With the evolving policy reforms, integration of financial markets and greater use of technology in finance, banks need to reposition themselves to maintain a competitive stance in the industry and remain responsive to the needs of all stakeholders through the efficient delivery of financial services and products and expanded market reach,” read BSP Circular 902 signed on Feb. 15 by Governor Amando M. Tetangco, Jr., as published on the BSP’s Web site.

On Feb. 10, the central bank announced that it will “gradually” lift the 17-year-old moratorium for the opening of new banks in the country, with the goal of fully reopening the sector to new players by 2018. The transition will occur in two steps: First, thrift banks will be allowed to apply for licenses to scale up and operate as a universal or commercial bank until mid-2017. By Jan. 1, 2018, the ban on new licenses will be fully lifted for all entities.

Under the new circular, any new bank seeking to start operations in the Philippines must have suitable or fit shareholders, “adequate financial strength,” a legal structure parallel to its operational structure, and must be led by a management with “sufficient” expertise and integrity.

Application fees for new licenses to operate in the country stand at P500,000 for universal banks and P400,000 for commercial banks, while license fees are pegged at P25 million and P20 million, respectively.

Thrift banks seeking to put up a head office in Metro Manila must pay P100,000 as application fee and P5 million as license fee, while those to be located in the provinces must settle P40,000 as application fee and P2 million as license fee.

For rural and cooperative banks, the rate stands at P10,000 for applying for a Metro Manila-based office, and P500,000 to secure a license to operate. Lower rates will be given for those seeking to operate in the provinces.

Application fees are deemed non-refundable and must be paid upon filing the written request to put up a bank, while the license fee must be settled once the BSP approves the plan to establish the new entity.

Among the other requirements needed for a new bank include formal agreements to organize a bank; biographical data of incorporators, subscribers, directors, and principal officers; a corporate plan and business model; feasibility study; and a notarized certification of each subscriber for the paid-up capital commitments.

The banks must also comply with the minimum capital requirements as set by the BSP.

Circular 902 also carries a provision which allows microfinance-oriented lenders to apply to put up a new branch after one year of profitable operations, subject to possible additional capital requirements to be set by the Monetary Board.

The relaxed rules are seen to allow local banks to scale up and position themselves better as external players come in, Mr. Tetangco earlier said, following the signing of Republic Act 10641 that allowed the full entry of foreign banks in 2014 and the Southeast Asian economic integration which officially started this year.

Banks may start official applications 15 days after the circular is published on the Official Gazette or in a newspaper of general circulation. The new regulations have not yet been published as of yesterday, a check with the central bank showed.