Bangko Sentral expands checklist for exiting banks
BSP Governor Eli Remolona Jr. —PHOTO FROM FACEBOOK OF DEPARTMENT OF FINANCE
MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) wants to expand the conditions that exiting banks must meet before they can voluntarily surrender their license.
This is to ensure that banks that are closing up shop are in good financial shape and can timely settle all their obligations to depositors, creditors and relevant government agencies.
The BSP, which is led by Governor Eli Remolona Jr., will wait until March 21 for stakeholders’ comments on a draft circular that will amend the guidelines on exiting the banking business voluntarily.
Documents showed that six lenders had voluntarily surrendered their banking license in the last four years.
In the past, some banks gave up their banking permits when they merged or were acquired by other banks or shifted to other business activities. But only banks that are in the pink of financial health are allowed to voluntarily cease operations.
READ: Only healthy banks allowed to voluntarily surrender licenses — BSP
Draft circular
That said, the draft circular provided that banks wishing to give up their license must perform a “self-assessment” to determine their compliance with prudential criteria and requirements.
Among the conditions was the appropriation of funds for the payment of outstanding deposits and other short-term liabilities. The funds must be maintained for a minimum period of three years from the date of the BSP’s approval of the voluntary surrender of license, or until all obligations are fully settled, whichever comes earlier.
The bank must also give its stockholders the option to either withdraw their shares or maintain them if the bank decided to continue as a nonbank entity.
The proposed amendments would also require a financial institution that wants to exit the banking business to fully settle its dues and other obligations with relevant state agencies like the tax bureau and Philippine Deposit Insurance Corp., among others.
Ultimately, draft circular provided that the bank –– upon the approval of the BSP to voluntarily give up its license –– must immediately cease to carry on banking business and “other licenses/authorities granted” by regulators like trust or investment management license.
