Another Asian lender is eyeing to establish operations in the Philippines under the current relaxed bank ownership regulations, according to the Bangko Sentral ng Pilipinas (BSP).
Speaking before the banking community during the central bank’s annual reception Tuesday night, BSP Governor Amando M. Tetangco noted that “the entry of new foreign banks under the liberalized regime should further enhance the quality of competition among banks and nurture innovations that will ultimately benefit the general public.”
To date, the BSP had allowed the following foreign banks—all Asian—to operate in the country: Japan’s Sumitomo Mitsui Banking Corp.; Singapore’s United Overseas Bank Ltd.; South Korea’s Shinhan Bank and Industrial Bank of Korea; as well as Taiwan’s Cathay United Bank and Yuanta Commercial Bank Co. Ltd.
Last week, Japanese financial giant MUFG acquired a 20-percent stake in Security Bank in a deal valued at P37 billion, making it one of the largest foreign acquisitions of a local bank in recent years.
“The Philippine banking community is going to be even more dynamic with the entry of six banks from [Japan, Singapore, South Korea and Taiwan]. The entry of these six banks to the Philippines could catalyze further innovations in our banking sector. We expect more to come in,” Tetangco said.
Deputy Governor Nestor A. Espenilla Jr. told reporters that the application of another Asian bank to establish operations here is pending with the BSP.
Espenilla said more foreign banks would likely come in “because it makes sense.”
“There are very few growth areas in Asia, for example, so it is quite logical that foreign banks are looking at the Philippines because their home markets are stagnant. So if they are looking for growth, the Philippines is one because we have good prospects,” Espenilla pointed out.
In 2014, President Aquino signed into law Republic Act No. 10641, which allows the full entry of foreign banks.
Foreign lenders can compose a maximum of 40 percent of the banking industry’s assets under the new law. Espenilla had said foreign banks account for only less than 11 percent of the industry’s total assets as of the middle of last year.