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Manila Bulletin devider Business devider 30 rural banks opted for M&As - BSP

30 rural banks opted for M&As - BSP

Published Jul 15, 2021 06:02 pm

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said 30 rural banks have undergone mergers and consolidations in the past two years as part of the BSP program to promote mergers and acquisitions (M&As) and consolidations in the small banking sector.

Diokno said the 30 rural banks were part of M&As and consolidation transactions that BSP helped promote in 2019, which was the year when the Consolidation Program for Rural Banks or CPRB expired.

Of the 30 rural banks, 16 have been absorbed by thrift banks while the rest were merged with other rural banks, said the BSP chief.

The BSP is currently developing a new program for rural banks or the Rural Banking Industry Strengthening Program (RBSP) to provide financial services to the agriculture sector as well as to the micro, small and medium enterprises (MSMEs).

The RBSP Inter-Agency Working Group (IAWG) is currently reviewing and assessing the rural banking industry to indentify areas of intervention and to formulate and implement a program of actions.

“RBSP is aimed at improving rural banks’ operations, capacity, and competitiveness amid evolving challenges in the banking industry. This is part of the BSP’s broader and continuing efforts to boost the resilience of the rural banking industry,” Diokno.

The RBSP followed the CRPB, the CPRB Plus, Strengthening Program for Rural Banks (SPRB), SPRB Plus, and the Rural Bank Rehabilitation Program.

The RBSP IAWG is expected to release its policies and programs in the fourth quarter this year.

As of end-March this year, the 406 rural banks’ total assets is about 1.4 percent of the entire banking sector’s resources.

The rural banking sector had a cumulative net profit of P1.357 billion in the first quarter, up from same period in 2020 of P1.255 billion.

“They are strategically positioned to be a catalyst for financial inclusion,” said Diokno, adding that the industry’s loan portfolio is mainly composed of loans for wholesale and retail trade, as well as agriculture, forestry, and fishing, with a combined share of 56 percent.

“Moreover, rural and cooperative banks have consistently posted the highest Agri-Agra compliance rates in the banking industry. They also cater to 76 percent of the banking industry’s total borrowers that are MSMEs,” said Diokno.

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