BSP reviewing 4 bank merger proposals

Published November 18, 2021, 5:20 PM

by Lee C. Chipongian

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said they have four bank merger applications currently under review, as well as two proposals for consolidations and one for acquisition.

BSP Governor Benjamin E. Diokno

Diokno said on Thursday, Nov. 18, that the applications are being processed by BSP’s different financial supervision departments at the moment.

Since 2019, the BSP has approved 17 bank mergers overall, three banks that applied for consolidation and processed one bank which acquired another financial institution.

Diokno said most of the approved mergers were between two banks while consolidations involved more than three banks. About four banks were approved for consolidation under its Consolidated Program for Rural Banks.

When asked during his regular online press chat, Diokno said he has no preferred number of how many big banks should be in operation.

“There is no ideal number of participants in the banking system,” he said. “Rather than setting an ideal number of key players in the industry, the BSP aims to maintain financial stability.”

Diokno said the BSP has long advocated for bank mergers, consolidations and acquisitions (MCAs) which he said should create a “stronger, more resilient banking institutions that are adoptive to the ever changing financial environment.”

MCAs results in banking institutions with higher capitalization, better economies of scale and wider market reach, he added.

The BSP currently supervises 46 big banks or the universal and commercial banks, 47 thrift banks and 420 rural and cooperative banks.

An inter-agency agreement to streamline MCAs has recently been signed by five regulators that include the BSP, Philippine Deposit Insurance Corp. (PDIC), Securities and Exchange Commission, Cooperative Development Authority, and Philippine Competition Commission. The agencies will issue implementing guidelines within 60 business days from the signing of the MOA last Nov. 5. A joint circular will also be issued.

It was banking co-regulator, PDIC, which instigated the MOA. The MCA project is aligned with the government’s mandate to promote transparency in its transactions with the public through the adoption of simplified requirements and procedures, and to expedite business transactions.

The five financial regulators agreed to harmonize documentary requirements, implement simultaneous processing by the agencies, reduce processing time, and facilitate prompt action or resolution of banks’ MCA applications.

The regulators essentially agreed to simplify and trim procedures from 58 documentary requirements to just 30. They also agreed to cut the processing time of MCA proposals to 55 business days versus 160 days currently being implemented.