By LEE C. CHIPONGIAN
September 19, 2011, 12:00am
MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has approved
what it called a coordinated incentive program to encourage mergers and
acquisitions (M&As) and consolidations in the cooperative banking sector
to support cooperative banks with deficient capital.
As of the end of the first quarter, there are 40 operating cooperative
banks in the country with P15.9 billion in resources. Including
branches, the total number was 164 cooperative banks.
The BSP with the Philippine Deposit Insurance Corp. (PDIC) and
government financial institution (GFI) Land Bank of the Philippines have
put up the Strengthening Program for Cooperative Banks (SPCB), which
will run for one year or until August 2012 to assist and support
cooperative banks with capital deficiency and to find white knights or
strategic third party investors (STPIs) for banks that need capital
infusions.
In a statement, the BSP said it has already set specific guidelines for
the STPIs. In the meantime, the operating guidelines for the
implementation of the program will be jointly issued soon by the BSP,
the PDIC and Landbank.
Under these guidelines, investors will be given incentives to
cooperative banks and their partner STPIs, and these include targeted
financial assistance to augment capital, credit facilities to support
business expansion, and a package of regulatory relief.
The capital support component, in the meantime, will be available
through PDIC's and Landbank's financial assistance. According to the
BSP, surviving banks entering M&As or consolidations are cooperative
banks or banks, which are at least 67 percent owned by cooperatives.
These banks are expected to have a much improved capital position with a
net worth of at least P100 million and a minimum risk-based capital
adequacy ratio of 15 percent that will place them in a better position
to expand their lending activities and provide a wider variety of
innovative financial services especially catered to primary cooperatives
and their members.
PDIC and Landbank will infuse equity into the STPIs, said the BSP, to
neutralize the potential adverse impact of asset write-downs that are
essential to clean up the books and ensure that surviving banks are
strong and capable.
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