SUNDAY, 01 MAY 2011 19:41
JUN VALLECERA / REPORTER
RURAL BANK executives are moving heaven and earth to have just a line in
the Rural Banking Act amended to reflect a radical shift in policy
favoring the entry of foreign shareholders.
They know convincing members of Congress to act on it will typically
take two and a half years and this was why GM Bank president and chief
executive officer Tomas Gomes IV has started the process of consulting
lawmakers.
At the Bangko Sentral ng Pilipinas (BSP), Deputy BSP Governor Nestor
Espenilla Jr. openly supported the Rural Bankers Association of the
Philippines's (RBAP) bid to have the law amended so that foreign
ownership of rural banks is finally permitted.
"Their entry will not be mandated. Rural bank shareholders can refuse to
be bought or taken over by foreign interests. It's not as if they are
obligated to sell to foreign investors," Espenilla said of the proposal
and of arguments that some of the nation's assets are being sold
wholesale to foreign interests.
It all depends on Congress if its members mind changing the law but
Espenilla believes the proposal is a good idea "so there is flexibility
in expanding the investor base of rural banks."
"Basically they will just be adding to the investor base of rural banks,
so that is potentially large money that could act as catalyst for
consolidation. Almost all the problems of rural banks concern knowhow.
And because the foreign investor is more disciplined, this will add
discipline to the system," he said.
Gomez, who once headed the RBAP as its president, said the amendment
will align rural bank privileges with those of thrift banks, where
foreign ownership is permitted up to 60 percent of total equity.
Some rural banks are already part owned by foreigners via so-called
holding companies, such as the Rural Bank of Angeles in Pampanga
province through its link with Asia United Bank, whose own equity
structure is partly owned by Singaporeans in Magis Equity Ventures.
Rural Bank of JP Laurel in Batangas is also partly owned by the Rizal
Commercial Banking Corp., which is in turn partly owned by the
International Finance Corp., the private investment arm of the World Bank.
Gomez acknowledged that even without the proposed amendment foreign
interests may still be part owners of rural banks at present, but only
as indirect owners.
Direct ownership is sought because then foreign interests have direct
participation at the governance level, Gomez explained.
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UNITED NATIONS ENVIRONMENT PROGRAMME (UNEP)
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