More rural banks ready to consolidate, says PDIC

MANILA, Philippines - State-run Philippine Deposit Insurance Corp. (PDIC) sees further consolidation in the country’s rural banking industry with the consolidation of 10 major stakeholders.

PDIC president Cristina Que Orbeta expressed optimism that more rural banks would soon avail of the incentives under the Consolidation Program for Rural Banks (CPRB) and maximize its benefits for their expansion and institutional strengthening.

“I trust that more banks will see CPRB as a beneficial program for the whole rural banking industry and will therefore take advantage of this opportunity,” she said.

CPRB, a tripartite program of the PDIC, the Bangko Sentral ng Pilipinas (BSP), and Land Bank of the Philippines, was launched in August last year to encourage consolidation among rural banks to improve financial strength and enhance their viability.

Orbeta said two groups consisting of 10 rural banks have pending applications to avail of incentives under the CPRB.

She pointed out the program aims to bring about a stronger and less fragmented banking system and provide opportunities to enhance rural banks’ business prospects and ability to face increased competition.

She assured the depositing public that consolidation among banks would be beneficial to the industry and will strengthen the banking system.

“While consolidation reduces the number of operating banks, the CPRB ensures the remaining consolidated banks are financially stronger with higher capital base and equipped to provide improved services to depositors in terms of upgraded facilities, expanded banking products, and enhanced management and governance,” she added.

Rural banks that avail of CPRB would receive assistance in financial advisory, business process improvement, and capacity building.

These include training on credit evaluation and administration, audit and internal control, personnel management, accounting/record keeping, treasury, information technology, and governance.

Landbank would provide while the BSP would observe full flexibility in the grant of incentives to participating banks.

Proponent banks that comprise a group of at least five rural banks with head offices or majority of branches located within the same region or area are eligible to avail of the CPRB. A rural bank with head office in a nearby region may also avail, provided that all program objectives are met.