By Melissa Luz T. Lopez, Senior Reporter
THE CENTRAL BANK has removed higher licensing fees for banks to open new branches within cities in Metro Manila, alongside stringent requirements for granting bank licenses to simplify rules for bank expansions.
In a statement, the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) announced it has lifted the more expensive licensing fees for banks to open branches in the cities of Makati, Mandaluyong, Manila, Parañaque, Pasay, Pasig, Quezon and San Juan.
“This is to encourage BSFIs (BSP-supervised financial institutions) to expand their branch network and consumer touch points and ultimately promote financial inclusion,” the central bank said.
Since 2014, the BSP has levied a heftier licensing fee for banks who want to open branches in the above-mentioned eight Metro Manila cities, as it wanted to push banks to open in other areas, particularly unbanked towns.
Universal and commercial banks looking to open a branch in the said cities had to pay P20 million for a license to operate there, versus the P200,000 maximum branch processing fee for other locations. Meanwhile, thrift banks had to shell out P15 million to open a new branch in the previously restricted areas.
Other changes in the recently-approved measure include streamlined requirements for various business adjustments or expansion plans pursued by financial firms.
The BSP is splitting licensing decisions into three categories. The type A license carries the most number of requirements, as it covers activities like the creation and sale of branches and branch-lite units, equity investment in allied and non-allied undertaking, and trust and other fiduciary business which are “likely to expose the BSFI to increased risks.”
A bank can secure such license from the BSP if they can get a Capital adequacy, Asset quality, Management, Earnings, and Liquidity rating of at least 3; ample governance and independent control functions; and compliance with BSP directives.
On the other hand, a bank’s decision to convert to a lower bank category and amend its articles of incorporation or by-laws fall under the type B license, which still requires the BSP’s approval but will not need to follow a certain set of qualifications.
Simpler bank changes like the relocation of approved but unopened branches, the permanent closure and surrender of a branch license, and servicing of deposits outside bank premises will no longer need prior BSP approval. The regulator is forgoing approvals as these are merely “business decisions made to manage operations.”
“The Bangko Sentral shall continue to align the requirements for other activities requiring special authorities with the new framework to promote efficiency and reduce business costs,” the central bank said, noting that such changes were introduced to promote the ease of doing business in the country.
The regulator has been actively simplifying application processes and removing prior approvals to allow financial firms more leeway to expand their businesses without government intervention. Among the biggest changes include the removal of approvals for banks to offer commercial bond papers, which encourages more lenders to raise funding through the capital markets.