Foreign banks can now apply to operate in the country or to acquire up to 100% of a local lender following the issuance of the implementing rules and regulations of the amended foreign banks law.
“We are very appreciative of the efforts of our legislators to pass into law RA 10641 and the BSP is quite happy to now issue the IRR to execute this law,” Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. said.
RA 10641 allows the entry of more foreign banks in the country. Moreover, this allows foreign banks to buy as much as 100% of a local bank, amending a previous provision that only permits them to own up to 60% of any Philippine lender’s voting stock.
“Implementing the new law comes at an opportune time because the foreign banks can be vehicles for foreign direct investments into the Philippines at a time when we have attained investment-grade rating while also preparing further for regional integration,” Tetangco said.
Foreign banks wanting to enter the domestic market should be established, reputable, and financially sound firms, the BSP said, as the new law focuses on these three instead of a bank’s ranking by size either globally or in their own jurisdiction.
These banks are also required to be widely-owned and publicly listed in their home country, the central bank said.
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The new law also mandates the BSP to keep a ceiling on assets held by foreign banks at 40% of the whole banking system’s resources, higher than the previous cap at 30%. This means domestic banks should, at all times, hold at least 60% of the system’s resources.