BSP, Indonesia's OJK formally start talks for bilateral banking deal

The Bangko Sentral ng Pilipinas (BSP) and Otoritas Jasa Keuangan (OJK) of Indonesia have inked a Letter of Intent (LOI) to formally start negotiations which would allow the entry of banks from one country to another.

The BSP said the LOI was signed by BSP Governor Amando M. Tetangco, Jr. and OJK Chairman Muliaman D. Hadad in Jakarta, Indonesia on Sunday.

"(T)he LOI signifies our intention to further explore areas of cooperation between our banking systems, especially on the entry of qualified ASEAN banks (QABs)," Tetangco said.

"(B)eyond the LOI document itself, the BSP looks forward to the exchange of views with OJK on supervisory and regulatory framework and related issues," he added.

Under the ASEAN Banking Integration Framework (ABIF) first endorsed in December 2014, QABs are allowed to operate freely across the 10-member economies of the Association of Southeast Asian Nations.

To be considered a QAB, however, lenders must meet global banking standards and guidelines for their operations, set under bilateral agreements between the home and host countries.

Aside from Indonesia, the BSP is also in talks with the Bank of Thailand (BOT) on opening their respective banking industries to each other.

Prior to this, the BSP inked a bilateral agreement with the Bank Negara Malaysia (BNM) to allow the entry of QABs between the two countries.

For his part, Deputy Governor Nestor A. Espenilla Jr. said he is keen on opening up the Philippine financial system to more foreign competition.

Espenilla is set to take over as BSP Governor when Tetangco retires on July 2. —ALG, GMA News