MANILA, Philippines — Financial regulators led by the Bangko Sentral ng Pilipinas (BSP) signed an agreement to streamline the merger, consolidation and acquisition process among banks.
BSP Governor Benjamin Diokno said the central bank yesterday signed an inter-agency agreement with the Securities and Exchange Commission (SEC), Philippine Competition Commission (PCC), Philippine Deposit Insurance Corp. (PDIC) and the Cooperative Development Authority (CDA) to encourage consolidation in the banking sector.
“Today’s agreement aims to streamline processes, reduce processing time, and facilitate prompt action of applications for mergers, consolidations and acquisitions,” Diokno said.
The regulators agreed on a harmonized list of requirements for merger, consolidation, and acquisition proposals of banks, effectively cutting by half the number of documentary requirements to 30 from 58.
The synchronized timelines and the elimination of duplicate functions among the concerned agencies would significantly reduce the total processing time to only 55 from an average of about 160 business days.
The BSP chief said the regulator has long advocated for bank mergers and consolidations to promote resilient institutions anchored on good governance and effective risk management practices.
Together with the PDIC and state-run Land Bank of the Philippines, Diokno said the BSP launched programs to provide banks that decide to merge, consolidate, and acquire with incentives like staggered booking of unbooked valuation reserves and restructuring of past due obligations with the central bank, among others.
“We will continue to pursue reforms and improvements in supervisory oversight that promotes the soundness, stability, and competitiveness of the banking sector,” Diokno said.
Aside from Diokno, other signatories of the memorandum of agreement (MOA) on the procedures for applications for mergers, consolidations, and acquisition of banks during the virtual event were SEC chairperson Emilio Aquino, PCC chairperson Arsenio Balisacan, PDIC president and chief executive officer Roberto Tan as well as CDA chairperson Joseph Encabo.
Initiated by the PDIC, the multi-agency project aims to harmonize the requirements and synchronize the timelines in the processing of merger, consolidation, and acquisition proposals of banks.
The project aims to support the government’s thrust of promoting ease of doing business that was commended by the Anti-Red Tape Authority in March last year.
The agreement embodies the responsibilities and commitments of each of the regulators on the simplified requirements and streamlined procedures and timelines in processing of MCA applications.
The implementing guidelines on the procedures for MCA applications will be issued via a joint circular by the partner-agencies.
Meanwhile, the BSP has ordered the closure of United People’s Rural Bank Inc., bringing to nine the number of problematic banks shuttered this year.
BSP Deputy Governor Chuchi Fonacier said the Monetary Board has issued Resolution No. 1492.A last Nov. 4 prohibiting the United People’s Rural Bank from doing business in the country pursuant to Section 30 of Republic Act 7653 or The New Central Bank Act, as amended.
The regulator also directed PDIC to take over the closed bank and act as receiver with a directive to proceed with the takeover and liquidation of the aforementioned rural bank in accordance with Section 12 (a) of RA 3591 or the PDIC Charter, as amended.