The incoming Bangko Sentral ng Pilipinas (BSP) governor, Monetary Board member Eli M. Remolona, is expected to focus on enhancing local banks’ readiness and competitiveness to go regional, according to bankers.
Bankers Association of the Philippines (BAP) President Jose Teodoro “TG” Limcaoco said this is possible with Remolona’s global experience in financial markets and regulations.
"With his extensive global experience and expertise in financial markets and regulations, we are confident that Dr. Remolona will anchor the Philippine banking industry not only towards continuous stability of the financial system, but also to growth and competitiveness in the regional stage," said Limcaoco.
He also said BAP will support the incoming BSP chief on “various initiatives impacting the banking industry” such as financial market development, cybersecurity and sustainability or green banking.
The 44-member group said the banking sector remains resilient under the “steadfast leadership” of outgoing BSP Governor Felipe M. Medalla who will retire on July 2.
"Dr. Medalla ascended in his role as BSP Governor in a period wherein the economy is facing various macroeconomic headwinds. We applaud Dr. Medalla for steering monetary policy towards achieving the twin goals of promoting economic growth and price stability,” said Limcaoco.
The ASEAN 5 which includes Philippines, Indonesia, Malaysia, Singapore and Thailand have agreed to have one Qualified ASEAN Bank or QAB at least in each country. QABs are banks with global banking standards that follow strict operational guidelines as set by bilateral agreements between home and host countries.
For BSP, there is still much to do in terms of documentation to complete the QAB agreement process bilaterally with Indonesia, Thailand and Malaysia.
Despite the global pandemic, the objective was that by 2020, the region should have a liberalized regional banking sector under the ASEAN Banking Integration Framework (ABIF). The ABIF is still in a process due to Covid-related delays.
Meanwhile, the pandemic has affected foreign banks with previous plans to establish local units or branches in the Philippines.
Before 2020, there were at least three foreign banks based in Hong Kong, South Korea and Indonesia that were in the preparation stage to set up local branches here. The Indonesian foreign bank was intending to come in under the QAB bilateral deal.
Since 2014, when Republic Act No. 10641 or An Act Allowing the Full Entry of Foreign Banks in the Philippines amended the previous foreign bank entry law, a total of 12 foreign banks were allowed to set up bank branches in the country. These foreign banks are mostly regional banks from Taiwan, South Korea and Japan.
As of end-2022, the 29 foreign banks here accounted for 6.2 percent of total banking resources. Foreign banks’ assets grew by 1.5 percent year-on-year to P1.42 trillion last year.
The BSP has three ABIF negotiations as of 2021. The BSP has yet to conclude a bilateral accord with an ASEAN counterpart under ABIF.
With Remolona as new BSP governor, Philippine banks expect more activity on the regional banking arrangements under his six-year term that will begin on July 3.
The incoming BSP governor has worked for the Bank for International Settlements (BIS) for 20 years, both in Basel, Switzerland and Hong Kong BIS offices, and 14 years at the Federal Reserve Bank of New York.
He also had World Bank experience in his earlier days as financial sector economist, and has been a consultant to the International Monetary Fund and the Asian Development Bank.
Remolona is known to have an “extensive policy and operational experience in central banking, economic policy, international finance and financial markets”.
He was BIS regional head for Asia and the Pacific from 2008 until 2018 and has worked with central bank governors in the region on issues such as financial stability and capital market development, while also overseeing BIS asset management for Asia-Pacific central banks.
Before his post as Monetary Board member in mid-2022, Remolona was independent director of Bank of the Philippine Islands (BPI), the banking arm of the Ayala Group of Companies. This was his only private banking job.
Limcaoco is currently the president and CEO of BPI.