BSP eases rules on bank expansion

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has lifted another hindrance in the expansion of bank branches and streamlined the guidelines for the issuances of licenses to venture into the trust, quasi-banking, and derivatives to promote ease of doing business.

The central bank’s Monetary Board approved the revised guidelines streamlining the licensing requirements for BSP supervised financial institutions (BSFIs) applying for special authorities.

“This is in line with the thrust of the BSP to apply the risk-based approach to the licensing process and promote ease of doing business,” the BSP said.

The new issuance now provides standard documentary requirements and fee structure for all licensing applications.

“In this respect, the Monetary Board decided to lift the special licensing fee for applications to establish branches or branch lite units in cities previously considered as restricted areas,” the central bank said.

This is to encourage BSFIs to expand their branch network and consumer touch points and ultimately promote financial inclusion.

The approved guidelines cover the first set of special authorities with streamlined licensing requirements.

“The BSP shall continue to align the requirements for other activities requiring special authorities with the new framework to promote efficiency and reduce business costs,” it added.

Under the revised guidelines, the regulator would classify licenses for special authorities into three categories namely, Types A, B, and C.

“The requirements set out for each category are proportionate to the magnitude of risks that may arise from engaging in a specific activity and take into account the capability of the BSFI to manage the risks,” the central bank added.

Activities with Type A license that include establishment and sale of branches or branch-lite units (BLU), equity investment in allied and non-allied undertaking, trust and other fiduciary business, among others, are likely to expose the BSFI to increased risks.

In this regard, application for a Type A license requires compliance with CAMELS (capital adequacy, asset quality, management, earnings, liquidity, and sensitivity to market risk) rating of at least three, governance and independent control functions that meet what is considered appropriate for the BSFI, and compliance with BSP directives.