BSP sets rules on establishment, relocation, sale of bank branches

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) has laid down the guidelines on the establishment, relocation, voluntary closure and sale of bank branches to promote and maximize the delivery of efficient and competitive banking services.

BSP Governor Amando Tetangco Jr. said the Monetary Board has approved the amendments to relevant provisions of the Manual of Regulations of Banks on bank branches to align with the regulatory reform initiatives that promote a stable and competitive banking environment.

The revised rules, he said, covers the establishment, relocation, voluntary closure, and sale of local branches of domestic banks including locally incorporated subsidiaries of foreign banks as well as establishment of branches of foreign banks in the country.

“The BSP shall promote and maximize the delivery of efficient and competitive banking services especially to underserved markets and customers through innovative policies,” Tetangco stated in Circular 932 issued last Dec. 16.

The MB also reaffirmed the general thrust of allowing banks to establish branches anywhere in the Philippines, including in the cities previously considered as restricted areas, namely, Makati, Mandaluyong, Manila, Parañaque, Pasay, Pasig, Quezon and San Juan.

The BSP chief said banks may establish branches as long as they comply with the minimum capital requirement and their risk-based capital adequacy ratio (CAR) at the time of filing is not lower than 12 percent.

To qualify, banks should have no major supervisory concerns outstanding on safety and soundness and should not be under prompt corrective action (PCA) for those intending to establish branches in cities previously considered as restricted.

Tetangco said applicant banks should have been operating profitably for the year immediately preceding the date of application and newly-established banks should submit projection showing that profitability would be attained in the third year of operation.

The BSP pegged the special licensing fee for branch applications in cities previously considered as restricted areas at P20 million for universal and commercial banks or big banks, P15 million for thrift banks, and P1.5 million for rural and cooperative banks or small banks.

Banks could also open other banking offices as long as they comply with the minimum capital requirement and the 10 percent risk-based CAR.

The new rules allow the relocation, temporary closure as well as sale of existing branches or other banking offices subject to the approval of the Monetary Board.

Tetangco said a bank could purchase or acquire branches or other banking offices anywhere including Metro Manila subject to the application of the minimum capital requirement.

Latest data from the BSP showed the number of banks operating in the country declined to 613 in end-September, 22 less than the 635 recorded in the same period last year due to the consolidation of banks as well as the exit of weaker players.

This comprised of 41 big banks, 64 thrift banks, and 508 small banks. The BSP has ordered the closure of 22 problematic banks this year, eight more than the 14 banks shuttered in 2015.

The BSP also gave the green light to nine foreign banks to establish their presence in the Philippines under Republic Act 10641 signed by former president Benigno Aquino III in July 2014.