MANILA, Philippines—The central bank on Thursday (Nov. 18) urged local financial institutions to merge with or acquire others in the industry as a means to grow bigger and stronger and be able to stave off challenges from external shocks.
To this end, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said a new set of rules streamlining the requirements of various regulatory agencies for bank mergers, consolidation and acquisitions will be released in two months.
“The memorandum of agreement recently signed by the country’s financial regulators provides an efficient mechanism for banks to pursue [mergers and acquisitions],” he said. “With higher capital and resources and better economies of scale, banks can widen their reach and gain more access to investments and client base.”
Earlier this month, the BSP, Philippine Deposit Insurance Corp., Securities and Exchange Commission, Cooperative Development Authority and Philippine Competition Commission signed an agreement to process bank mergers and acquisitions within 55 business days.
The move is aligned with the government’s mandate to promote transparency in its transactions with the public through simplified requirements and procedures, and to expedite business transactions.
The project also aims to harmonize documentary requirements, implement simultaneous processing by the agencies, reduce processing time, and facilitate prompt action or resolution of banks’ merger applications.
Diokno said it also aims to foster a dynamic working arrangement among the signatory agencies.
The agencies shall issue implementing guidelines within 60 business days from the signing of the deal, he said, and its guidelines will be issued through a joint circular.
The agreement also provided that agencies may pursue additional initiatives like the establishment of a data portal for the electronic submission of documents which may be accessed by the authorized personnel of each agency.
The harmonized list of requirements for merger proposals of banks will effectively cut in half the number of documentary requirements from 58 to only 30, and reduce the total processing time of merger proposals from an average of about 160 business days to only 55.
The project, which is in support of the government’s thrust of promoting ease of doing business, was commended by the Anti-Red Tape Authority in March 2020.