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Philippines: BSP sees more mergers, acquisitions
MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) expects to see more bank mergers and acquisitions after financial regulators agreed to streamline the processing of applications.
In his weekly virtual press conference, BSP Governor Benjamin Diokno said monetary authorities are processing five applications, including four for mergers and consolidation and one for acquisition.
“There is no ideal number of participants in the banking system. Rather than setting an ideal number of key players in the industry, the BSP aims to maintain financial stability. In line with this objective, the BSP has long advocated for mergers, consolidations, and acquisitions of banks,” Diokno said.
Since 2019, the BSP chief said the Monetary Board has approved a total of 17 mergers, three consolidations and one acquisition in the banking industry.
“Most of the approved mergers were between two banks, while four involved more than three banks. As to the approved consolidations, two were consolidated under the Consolidated Program for Rural Banks involving four banks,” he said.
Last Nov. 5, the BSP entered into a memorandum of agreement with state-run Philippine Deposit Insurance Corp. (PDIC), Securities and Exchange Commission (SEC), Cooperative Development Authority (CDA) and Philippine Competition Commission (PCC) to streamline the process for bank mergers, consolidations and acquisitions (MCAs).
The agreement aims to streamline processes, reduce processing time, and facilitate prompt action of applications for mergers, consolidations and acquisitions.
The regulators agreed on a harmonized list of requirements for merger, consolidation and acquisition proposals of banks, effectively cutting by half the number of documentary requirements to 30 from 58.
The synchronized timelines and the elimination of duplicate functions among the concerned agencies would significantly reduce the total processing time to only 55 from an average of about 160 business days.
The MCA project is aligned with the government’s mandate to promote transparency in its transactions with the public through the adoption of simplified requirements and procedures, and to expedite business transactions.
It also aims to harmonize documentary requirements, implement simultaneous processing by the agencies, reduce processing time, and facilitate prompt action or resolution of banks’ MCA applications. Moreover, it aims to foster a dynamic working arrangement among the signatory agencies.
“The MOA recently signed by the country’s financial regulators provides an efficient mechanism for banks to pursue MCAs,” Diokno said.
With higher capital and resources and better economies of scale, the BSP chief said banks could widen their reach and gain more access to investments and client base.
The agencies shall issue implementing guidelines within 60 business days from the signing of the MOA. The guidelines shall be issued through a joint circular.
The BSP has long advocated for bank mergers and consolidations to promote resilient institutions anchored on good governance and effective risk management practices.
Together with PDIC and state-run Land Bank of the Philippines, Diokno said the BSP launched programs to provide banks that decide to merge, consolidate and acquire with incentives like staggered booking of unbooked valuation reserves and restructuring of past due obligations with the central bank, among others.
Source: https://www.philstar.com/business/2021/11/19/2142236/bsp-sees-more-mergers-acquisitions