2 groups of 9 rural banks to merge this year, says PDIC

The government is looking at extending the Consolidation Program for Rural Banks (CPRB) before it lapses next month, with two mergers among nine lenders seen approved before yearend.

“The Philippine Deposit Insurance Corp., the Land Bank of the Philippines and the Bangko Sentral ng Pilipinas are already exploring the possible extension of the CPRB, as the program’s expiry is on Aug. 25,” PDIC president Roberto B. Tan told the Inquirer Friday, referring to the three agencies jointly shepherding the implementation of the program.

Under revised rules issued by the PDIC last April, the CPRB offered regulatory incentives to the merger of less than five rural banks with head offices or majority of the branches located in the same region or area.

When it was introduced in 2015, the CPRB mandated the consolidation of at least five rural lenders.

Under the new rules, a group of less than five rural banks may apply for CPRB perks as long as “the surviving bank should meet the existing requirements of risk-based capital adequacy ratio of at least 12 percent and a combined unimpaired capital of at least P100 million,” the PDIC had said.

According to Tan, four groups participated in the CPRB, of which two groups comprised of nine rural banks were already on the second phase of the program, or in the process of securing the consent of the PDIC, the BSP and the Securities and Exchange Commission for their merger.

“The PDIC expects approvals of the two consolidation transactions by the second half of the year,” Tan disclosed, without identifying the rural banks involved.

Tan said another group involving four rural banks was “about to engage its financial advisor for the conduct of due diligence.”

As for a group of five banks that earlier applied for the CPRB, it eventually opted to consolidate outside the program, Tan said.

The CPRB is a bank-strengthening program for rural banks aimed at enhancing their ability and viability to promote financial inclusion as well as stability in their respective communities.