BSP lifts bank-branching restrictions in 8 cities

BSP lifts bank-branching restrictions in 8 cities

SUNDAY, 05 JUNE 2011 19:17     VG CABUAG / REPORTER  

THE Bangko Sentral ng Pilipinas (BSP) has lifted the branching restriction of banks in eight Metro Manila cities in a move to promote a competitive environment to improve the country’s financial services.

The Monetary Board (MB), the policymaking body of the BSP, on Friday lifted the branching restriction under a two-phased liberalization that covers Quezon City and the cities of Makati, Mandaluyong, Manila, Parañaque, Pasay, Pasig and San Juan.

The cities were the only ones remaining when the government partially lifted the moratorium in December 2005.

Under the phase-one implementation, private and domestically incorporated universal, commercial and thrift banks that have less than 200 branches in the previous “restricted areas” can apply to establish a bank in the cities from now until June 30, 2014.

For the phase-two implementation, all banks, except rural and cooperative banks, will have access to apply for a branch in all the eight cities.

Rural and cooperative banks generally are not allowed to establish a branch in Metro Manila.

Government-owned banks can immediately apply for a branch in the said areas but these may have to justify the said application to the MB.

“This is a major policy reform that lifts the last remaining restriction on bank branching,” said BSP Governor Amando Tetangco Jr.

“We are expecting that the liberalization will further improve the competitive environment, which should translate to better financial services for the public. The new policy also aims to encourage banks to further scale up and improve their operations in order to be competitive,” he added.

Tetangco said the central bank also imposed a special licensing fee for the opened-up restricted areas to continue to promote a balanced delivery of financial services nationwide.

To qualify for additional restricted area branches, a commercial bank must have combined capital accounts of at least P10 billion and at least P3 billion for a thrift bank.

If a bank does not have the said capital requirement, the government is allowing the company to build up to June 30, 2014.

Applications by private banks for establishment of branches in the restricted areas under the Phase I implementation should be submitted to the BSP within 90 calendar days from effectivity of the circular.

The final number of branches that may be established by qualified banks in the restricted areas under Phase 1 may, however, be subject to adjustment by the MB based on the total number of applications received.

A nonrefundable special licensing fee of P20 million per commercial bank branch and P15 million per thrift bank branch shall be charged for accepted applications.

In addition, the applicant bank should comply with the other standard requirements for the grant of authority to establish a branch under existing regulations, except for the rule limiting the number of branch applications that may be submitted to the BSP to five at a time.

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