More big banks keen on buying up weak players

A string of acquisitions in the banking sector may be in the offing, with several large banks expressing interest to take over undercapitalized rural banks.

According to the Bangko Sentral ng Pilipinas, several commercial and thrift banks are keen on securing the incentives being offered by the regulator to those that will acquire troubled rural banks.

Last month, the BSP issued the implementing guidelines of the “Strengthening Program for Rural Banks Plus,” where an expanded set of incentives are offered to banks that are willing to acquire weaker players in the rural banking subsector.

“[The SPRB Plus] is quite promising. There has been significant interest in the program,” BSP Deputy Governor Nestor Espenilla Jr. told the Inquirer.

Espenilla said he could not yet disclose the details. But the BSP is optimistic that the interest expressed by larger banks may translate into actual acquisitions within the short term.

Last week, Banco de Oro chairperson Tessie Sy-Coson told reporters BDO was in search of more commercial banks to acquire as a means to expand. However, she said, there were no commercial banks interested in merging with BDO.

For now, she said, BDO will put up new branches on its own.

Coson also said BDO would look into the opportunity being offered by the regulator for the acquisition of rural banks.

Under the old incentives program the central bank and the Philippine Deposit Insurance Corp. would grant loans to strong rural banks that would acquire weaker ones so that they could start rebuilding their capital base. Other forms of regulatory relief were also offered to potential investors.

But the old program failed to generate interest among strong players in the rural banking subsector. It ran for two years before the BSP issued the SPRB Plus last month.

The new program offers incentives even to commercial and thrift banks that are interested in acquiring unhealthy rural banks.

The BSP and PDIC jointly established the incentives program to address failures in the rural banking sector of the past three years.