Philippines starts opening bank sector to Asean peers
MANILA, Philippines – The Philippines is set to sign agreements with two more countries as early as next month to open up the banking industry aimed at greater financial integration and economic development among members of the Association of Southeast Asian Nations (ASEAN).
Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said in a speech during the 29th National Convention of the Bankers Institute of the Philippines (BaiPhil) the Philippines would forge an agreement with two more ASEAN countries after signing a pact with the Bank Negara Malaysia last March.
Tetangco and Bank Negara governor Zeti Akhtar Aziz signed the Heads of Agreement (HoA) in Kuala Lumpur last March 14. The pact between the BSP and Bank Negara was one of the first bilateral agreements to be signed under the ASEAN Banking Integration Framework (ABIF).
Last November, Tetangco announced the start of the negotiations with Thailand and Indonesia as part of the integration under the ASEAN Economic Community (AEC).
The agreement with Malaysia allows up to three qualified ASEAN banks (QABs) from each jurisdiction to operate in the other country.
“In accordance with ABIF, the BSP has signed a high-level agreement with Bank Negara Malaysia governing QABs and looks forward to forging at least two more agreements as early as next month,” he said.
To achieve the consolidation of the 10 ASEAN markets into a single economic base with the launch of the AEC in 2015, Tetangco said there is a need to have an integrated and well-functioning regional financial system.
The integrated system is defined under the ASEAN Financial Integration Framework (AFIF) that also covers the integration of the banking markets under the ABIF.
According to him, the BSP has been upgrading the supervision framework in line with international standards, especially on corporate governance and risk management; requiring capital build-up and encouraging mergers and consolidations; and opening up barriers to entry.
He added the BSP’s Supervision and Examination Sector and the newly created Office of Systemic Risk Management would engage the banks in discussions to demystify and clarify the concepts behind ABIF and AFIF.
Tetangco reminded banks to be mindful of the risks as they prepare for the ASEAN integration.
The BSP chief said the Philippines could target a larger portion of ASEAN savings as it lags behind Indonesia, Malaysia, Singapore and Thailand.
The country also has a clear role to play as intermediary, paying or collecting agent, and investment advisor in the region.
The ASEAN region represents $2.4 trillion in combined gross domestic product, making it among the 10 biggest economies in the world.