Banks given 3 years to comply with listing rulesBy Michelle V. Remo |Philippine Daily Inquirer
The Bangko Sentral ng Pilipinas is giving local banks with foreign equity three years to list at least 10 percent of their shares on the Philippine Stock Exchange.
This was contained in BSP Circular 775-2012, which was issued last week.
In addition, banks that will take foreign investments in the future must list the same amount of shares within three years after the approval by the BSP of the foreign investment.
The circular serves as implementing guidelines to Republic Act No. 7721, which requires banks with foreign equity to list on the stock market. This law took effect in 1994.
The law allows the entry of foreign investors into the banking system to help generate additional capital for the development of the country’s banking system.
However, the law provides safeguards to prevent the possibility of putting the banking system under the control of foreign interests. The listing requirement is one of these safeguards, as this is seen to help ensure that local interests will continue to control and participate in the operation of banks in the country.
Since the law did not state a timeframe for compliance, the BSP decided to issue the circular.
The circular was issued amid calls for measures that would aid in the development of the country’s capital market, which was said to be lagging behind those of its neighbors in terms of volume of transactions.
Earlier, the BSP issued a regulation allowing banks to tap non-bank financial institutions outside the regulation of the central bank to serve as selling agents for the banks’ investment instruments.
Investment products of banks that are covered by this regulation include long-term certificates of time deposits (LTCTDs) and unsecured subordinated debts (UnSDs).
The objective is to improve the accessibility of financial instruments to a greater number of Filipinos to make the country’s capital market more active, officials said.
LTCTDs are time-bound deposits that earn interests. UnSDs are debt papers that provide interest to holders.
The BSP said non-bank financial institutions not covered by its regulatory authority may act as selling agents for the investment instruments of banks as long as they are registered with the Securities and Exchange Commission.