East West Banking Corp. (EastWest Bank) may apply for digital bank license with the central bank to spin off its digital bank unit Komo, said a member of the Gotianun family who owns the bank.

Josephine Gotianun-Yap, president and CEO of Filinvest Land Inc. and director of Filinvest Group’s banking arm, EastWest Bank, said they are assessing the digital banking market and the viability of converting or spinning off Komo as a separate digital bank.

“No decision has been made as of now, as far as that is concerned,” Yap told a forum hosted by the Economic Journalists Association of the Philippines on Tuesday, referring to plans to apply for a digital bank license.

“I think currently the digital banking service being done by Komo is quite sufficient at this point in time,” she said. Komo is a digital bank operated by subsidiary EastWest Rural Bank.

Yap said the bank is “heavily investing in digital initiatives” both on digital banking and EastWest Bank’s digitization efforts. “We’re always assessing developments in the industry including whether Komo will be spun off as a separate entity. We are always open as well to looking at strategic partnerships with the entities that can make the bank become a bigger player in the various fields,” she added.

EastWest Bank introduced Komo last May 2020, during the height of the strictest phase of the COVID-19 lockdown. It is an exclusively digital banking service via a mobile app, and since all transactions are done online, it has no physical branches.

Komo was launched in the local market before the Bangko Sentral ng Pilipinas (BSP) issued its circular for the establishment of digital banks in November 2020.

Based on BSP rules, a digital bank license requires a minimum P1 billion capitalization. This is lower than commercial banks’ minimum capitalization of P2 billion to P15 billion depending on where branches are located. A universal bank license is required a minimum capitalization of P3 billion to P20 billion.

But while digital banks’ minimum capital requirement is only P1 billion, the BSP could impose a higher minimum amount and capital ratio based on its assessment of the risk profile of the digital bank.

EastWest Bank is 11^th of the country’s 46 big banks. As of end-March this year, it posted a lower net income of P2 billion or 10 percent down from same period in 2020 of P2.3 billion.

The BSP has granted three digital bank license so far, and is reviewing the application of three commercial banks and one financial company.

BSP Governor Benjamin E. Diokno said earlier that he would like to limit the number of digital banks to just five but this is a flexible number that could be increased depending on the condition of the digital banking market at the time of review.