Ralph Recto
The Bangsamoro government plans to buy 80 percent of Al-Amanah Islamic Investment Bank of the Philippines (AAIIBP) from the Development Bank of the Philippines (DBP), citing its goal to promote financial inclusion and accelerate socioeconomic development in the region.
“Through this, we are taking bold steps to build a strong and vibrant Islamic banking system that caters to the specific needs of the people of Bangsamoro Autonomous Region in Muslim Mindanao (BARMM). This will support the Bangsamoro government’s efforts to provide vital social and infrastructure projects to fast-track the region’s progress,” Department of Finance (DOF) Secretary Ralph Recto said in a statement on Monday.
Recto said that the total purchase will amount to “less than P400 million.”
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By owning AAIIBP, the region expects to save about P6 billion in minimum capital that it would otherwise have to cough out if it were to set up a new universal bank from scratch.
AAIIBP is the Philippines’ first Islamic bank. According to its charter, it operates as a universal bank with an authorized capital stock of P1 billion, comprising 10 million common shares and a network of nine branches.
In 2008, the DBP bought almost all or 99.9 percent of the shares of AAIIBP, making it a subsidiary.
Development support
The Bangsamoro government’s planned acquisition of the Islamic bank aligns with the AAIIBP charter, which mandates the latter to support socioeconomic development in the BARMM.
“This will be achieved by performing banking, financing and investment operations as well as by engaging in agricultural, commercial and industrial ventures based on Islamic banking principles,” the DOF said.
AAIIBP has the authority to serve as the official bank for government-owned or controlled corporations (GOCCs), especially those in the BARMM region. This role fits well with the Bangsamoro’s Islamic Finance Road Map, making the transfer of DBP’s shares in AAIIBP a strategic and beneficial move.
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By controlling AAIIBP, the BARMM government aims to better finance its key projects and policies that other banks might not support. Additionally, it can boost market competition by offering new and innovative financial services.
Meanwhile, the DBP supported the share transfer and has assured the Intergovernmental Fiscal Policy Board (IFPB) that AAIIBP employees are fully capable of running an Islamic bank.
According to the DOF, the proposed transfer of shares was approved by the IFPB, which is co-chaired by Recto and Bangsamoro Government Minister of Finance, Budget and Management Ubaida Pacasem.
To complete the transfer, the Bangsamoro government and the DBP are now securing necessary approvals from the Bangsamoro Transition Authority–Parliament, the Bangko Sentral ng Pilipinas and the Governance Commission for GOCCs. INQ