BSP allows 7 banks to put up branches in restricted zones

Seven banks have been given the green light by the Bangko Sentral ng Pilipinas to establish 162 new branches in restricted areas including the cities of Makati, Mandaluyong, Manila, Parañaque, Pasay, Pasig and Quezon.   These banks are:  

• Development Bank of the Philippines,
• Land Bank of the Philippines,
• Security Bank,
• East West Bank,
• Bank of Commerce,
• Planters Bank, and
• Philippine Business Bank

  In a statement on Monday, the BSP said it approved the applications of the seven banks as part of its branching liberalization efforts.   “The branching liberalization underscores the value of a competitive market environment in promoting quality financial services,” the BSP said.   It added that by opening the eight cities to branches, “banks who are not yet deeply entrenched in these areas are provided the opportunity to have a physical base to deliver banking services to the public.”   The BSP said the liberalization is expected to improve access to banking services. “The public benefits with more choices while increasing competition among those banks that operate in these eight cities,” it said.   Last June, the BSP's Monetary Board approved a two-phased liberalization approach through BSP Circular 728 that is expected to fully lift the bank branching restriction in key cities in Metro Manila starting 2014 to promote a competitive market environment conducive to a better and improved quality of financial services delivery.   Under the first phase, second-tier universal and commercial banks and thrift banks that have less than 200 branches in restricted areas as of December last year would be allowed to apply and establish branches in the restricted areas until June 30, 2014. Banks were given until October 11 to file their respective applications.   To qualify for restricted area branches, a universal or commercial bank must have combined capital accounts of at least P10 billion while a thrift bank should have at least P3 billion. Banks with lower combined capital accounts would still be allowed to establish branches as long as they execute an undertaking to build up capital for a maximum period of not later than end June 2014.   The BSP said applicant banks or any of its subsidiary banks should not be under prompt corrective action (PCA) while banks under PCA and are compliant with the guidelines would only be allowed to open branches as soon as their PCA status is lifted.   It added that the final number of branches in the restricted areas that may be established by qualified banks would be subject to adjustment by the Monetary Board based on the total number of applications wherein the number of branches that could be established may be pro-rated.   The BSP would impose a non-refundable special licensing fee of P20 million per universal and commercial bank and P15 million per thrift bank and applicant banks should comply with standard requirement in the grant of authority to establish a branch under existing regulations. A significant portion of the special licensing fees would be used to fund projects that promote greater financial inclusion particularly of the unbanked and under-banked segments of the country.   The central bank said the second phase of the current liberalization approach would start on July 1, 2014 wherein branching in the restricted areas would be opened up to all banks except rural and cooperative banks that are not allowed to establish branches in Metro Manila.   The moratorium on the establishment of new banks and branches was first imposed in 1999.    However, the BSP implemented a partial easing of the moratorium in 2005 and 2008. Finally, the BSP narrowed the restricted areas to the eight major cities in Metro Manila in 2008. — KBK/KG, GMA News