To encourage consolidation among banks and quasi-banks, the Bangko Sentral ng Pilipinas is offering an array of incentives aimed at strengthening the entire banking sector.
Memorandum No. M-2016-023 issued by Deputy Governor Nestor A. Espenilla Jr. on Dec. 21 noted that under existing rules, the BSP “promotes mergers/consolidations and/or acquisitions of the majority or all of the outstanding shares of stock of banks/quasi-banks.”
As such, banks and quasi-banks may seek regulatory incentives from the BSP as long as these are “responsive to their specific needs and reasonable given the attendant circumstances,” Espenilla said.
He said banks and quasi-banks that would undergo M&As could tap the following perks: Revaluation of premises, improvements and equipment; staggered booking of unbooked valuation reserves over a maximum period of five years; temporary relief from compliance with capital adequacy ratio and/or maximum period for amortization of goodwill; conversion/upgrading of head offices, branches, and other offices, and condonation of liquidated damages/penalties on loan arrearages to the BSP.
Consolidating financial institutions may also enjoy the following: Relocation of branches/offices within one year in cases of duplication of branches in certain areas; installment payment of outstanding penalties in legal reserve deficiencies and interest on overdrafts with the BSP over a one-year period; reasonable period to comply with real estate loan limits; restructuring past due obligations with BSP over a 10-year period; concurrent officership between a merged or consolidated bank and another financial institution, and concurrent directorship between banks, and continued effectivity of right or privilege under a rehabilitation program or any special authority granted by the Monetary Board.