The central banks of the Philippines and Malaysia have agreed to allow up to three so-called Qualified Asean Banks (QABs) from each country to operate in the other.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said Governor Amando M. Tetangco Jr. had signed a heads of agreement (HOA) with Bank Negara Malaysia (BNM) Governor Zeti Akhtar Aziz in Kuala Lumpur yesterday.
The BSP said the HOA between the BSP and the BNM was among the first bilateral pacts signed under the Asean Banking Integration Framework (ABIF). It said the agreement was “in line with strengthening intra-regional trade and investments” under the said framework.
“While the HOA outlines market access and operational flexibilities that may be accorded to QABs from each jurisdiction into the other, these QABs shall operate under the prevailing laws and regulations in the Philippines and Malaysia, respectively,” the BSP said.
ABIF, approved by Asean member-states in 2014, allows QABs to have greater access to other Asean markets and more flexibility in their operations there, according to the Asean website.
“ABIF recognizes that some countries are more ready than others to further open up their banking sector and that gaps in market access across Asean member-states still persist. Hence, the current focus is on pursuing bilateral reciprocal arrangements,” Asean said.
The BSP defined QABs as “strong and well-managed banks, headquartered in Asean and majority owned by Asean nationals.”
“Banks that apply for QAB status must be endorsed by the home country regulator to and may be accepted by the host country regulator based on their bilateral agreement,” the BSP added.
According to the BSP, its HOA with the BNM will allow the establishment of operations of a maximum of three QABs from each country in the neighboring country.
“These QABs will enter the host jurisdiction only in the form of a subsidiary of the parent bank in the home jurisdiction in line with the principle of reciprocity,” the BSP said.
“As these QABs from Malaysia enter the Philippines, they will then be regulated under applicable BSP regulations and within the legal framework defined under Republic Act No. 10641,” it added.
Republic Act No. 10641 allows the full entry of foreign banks. So far, the BSP had allowed six Asian banks to fully operate in the country. Ben de Vera