In a statement over the weekend, the central bank said that its policy-making body Monetary Board (MB) is endorsing to
Promulgated in 1994, RA 7721 states that the Philippine banking and financial system is liberalized to create a more competitive environment and encourage greater foreign participation through increase in ownership in domestic banks by foreign banks and the entry of new foreign bank branches.
The law allowed the entry of foreign banks either through ownership of up to 60 percent of the voting stock of an existing domestic bank or of a new banking subsidiary or establishment of branches with full banking authority.
The central bank said that the proposed amendments also provide safety nets that ensure that the banking resources continue to be dominantly in the hands of domestic banks.
The BSP added that the current requirement is retained where at least 70 percent of resources must be held by domestic banks which are majority owned by Filipinos.
Also included in the proposed amendments is the power of the MB to suspend the further entry of foreign banks under any or all of the modes of entry as national interest warrants.
Asean qualified banks
The BSP said that it would be appropriate to revisit the 20-year-old law to take advantage of the investment grade status of
The said framework will qualify an Asean Qualified Banks (Qab) that can operate within Asean jurisdictions on equal terms as domestic banks of that jurisdiction subject to certain prudential and governance standards.
"Our investment grade makes us part of a limited group of sovereigns who are considered to adhere to the high standards of macroeconomic, fiscal and financial governance. Building on its achievement, we must nurture a competitive environment that can address the expanding needs of stakeholders," BSP Governor
The central bank also said that amending RA 7721 would be necessary for
However, the BSP said that there will be sufficient governance standards in place within ABIF for Philippine banks to qualify as QABs and for Asean banks to operate in
For his part, Deputy Governor
In terms of competition between foreign and domestic banks, Espenilla said that the entry of more foreign banks can be good because it will push domestic banks to develop a better services and better pricing for clients.
"There are good reasons for competition. We are also in the stage that we are quite comfortable in the stability of banking system. We are ready to compete," he said.
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