BNP Paribas shuts down offshore banking unit in Philippines

MANILA, Philippines — France’s BNP Paribas closed down its offshore banking unit in the Philippines, leaving the Taiwan Cooperative Bank as the lone foreign bank with offshore banking operations in the country.

Restituto Cruz, sector in charge of the Financial Supervision Sector at the Bangko Sentral ng Pilipinas (BSP), issued Circular Letter 2019 – 062 announcing the cessation of operations of BNP Paribas – Manila offshore banking unit.

BNP Paribas established its presence in Manila in 1975 as a representative office. It became a licensed offshore banking branch in 1997.

It offered a broad range of products and services to its corporate and institutional clients, including loan syndication, bond underwriting, export finance, project and aviation finance; interest rate, foreign currency and commodity hedging and derivatives; correspondent banking and global trade solutions.

A foreign bank may operate an offshore banking unit (OBU) in the Philippines, after the issuance of a certificate of authority to operate by the Monetary Board and registration with the Securities and Exchange Commission (SEC).

The issuance of permit to operate an OBU is based on liquidity and solvency positions, networth and resources base, managerial and international banking expertise of applicant bank, contribution to the Philippine economy and participation in the equity of local commercial banks and appropriate geographic representations.

Offshore banking covers transactions in foreign currencies involving the receipt of funds principally from external sources and from internal sources and utilization of such funds.

Some of the foreign banks that have closed down their offshore banking operations in the Philippines include ABN-AMRO Bank NV and JP Morgan International Finance Ltd. since the Global Financial Crisis in 2008.

On the other hand, some foreign banks have decided to set up branches in the Philippines after the country opened up the banking industry to foreign players.

Three banks from South Korea, Indonesia, and Hong Kong have signified their interest at establishing their presence in the Philippines on the back of the country’s sound macroeconomic environment and stable investment climate.

BSP Deputy Governor Chuchi Fonacier said more foreign banks are looking at setting up branches and representative offices in the Philippines on the back of the country’s sound macroeconomic fundamentals.

The BSP has so far allowed 12 foreign banks, including the world’s largest bank, to open branches in the Philippines since former president Benigno Aquino III signed Republic Act 10641 or An Act Allowing the Full Entry of Foreign Banks in July 2014 removing the limit in the number of foreign banks that can enter in the country.