Another foreign bank will open its doors in the Philippines soon, following in the footsteps of two of Asia’s largest financial institutions that had set up shop in the country, regulators said.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Nestor A. Espenilla Jr. said the Monetary Board approved the entry of another Asian bank in the country, following recent legislation that opened up the local banking industry.
“We are going to make an announcement this week after the bank makes its own official announcement,” Espenilla said Tuesday.
The identity was not disclosed due to regulatory issues at the bank’s home country.
“We are going to let them make the announcement first because it is a listed firm in that country,” Espenilla said.
Last year, Congress relaxed restrictions on the entry of foreign banks in the Philippines. The limit set on foreign banks set under an old law was removed to encourage more investments in the Philippine banking sector. Foreign banks are also now allowed to corner as much as 40 percent of the financial industry—up from 30 percent under previous rules.
In easing the restrictions on foreign banks, the Philippines also got to fulfill one of its commitments to the multilateral agreement for closer economic integration in Southeast Asia.
Japan’s Sumitomo Mitsui and South Korea’s Shinhan were the first institutions that had received the authority to set up branches in the country. Sumitomo is Japan’s second largest lender, while Shinhan leads its domestic market.
Both banks preferred to set up branches in the Philippines instead of acquiring a local lender or incorporating locally. Paolo G. Montecillo