BSP sees more rural banks consolidating

A number of rural banks are preparing to merge under the enhanced consolidation program aimed at strengthening small lenders.

So far, there was not one deal officially applied under the Consolidation Program for Rural Banks (CPRB), Bangko Sentral ng Pilipinas (BSP) Deputy Governor Nestor A. Espenilla Jr. said in a recent text message.

But Espenilla said “several deals are under preparation.” He, however, did not elaborate.

Last year, Philippine Deposit Insurance Corp. (PDIC) president Cristina Q. Urbeta said five to six rural banks in the Visayas were considering merging under the CPRB.

Espenilla said these Visayas-based rural banks were “still discussing terms” for the deal.

In a statement on Thursday, PDIC urged rural banks to participate in the program, which would be open until Aug. 25 next year.

The CPRB, jointly shepherded by the BSP, PDIC and Land Bank of the Philippines, is a “bank-strengthening program specifically designed for rural banks to help enhance their viability and ability to promote financial inclusion and financial stability in their respective communities,” the PDIC noted.

Orbeta said rural banks should “take advantage of the CPRB, especially in the face of increased competition brought about by the integration of financial markets in the Asean region.”

“I trust that rural banks will endeavor to expand their horizons, create the possibilities and opportunities for their business, and look at CPRB as a window of opportunity to expedite their decision-making process,” she added.

In January, Espenilla disclosed that the BSP was looking at modifying the Strengthening Program for Rural Banks (SPRB)-Plus to complement the new scheme under the CPRB.

SPRB-Plus—a modified version of the original SPRB—is a joint project between the BSP and the PDIC, which acts as receiver for shuttered banks. It provides incentives for “white knight” investors to acquire smaller banks and encourage consolidation within the sector that caters to the most sensitive segment of the economy.