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WHOLESALE BANKING | Cesar Tordesillas, Philippines

Philippines provides more incentives to bank mergers

The Bangko Sentral ng Pilipinas has revised its rules and allowed more incentives on banks’ mergers and consolidations.

The improved package of incentives appliesto all levels – commercial, thrift and rural banks.

In the circular memo, BSP Deputy Governor Juan de Zuniga Jr. said banks who are pursuing consolidations or mergers and acquisitions or M&As will be granted incentives or regulatory reprieves as needed.

Zuniga said that to promote the M&A and bank consolidation policy, as well as “purchases or acquisitions of majority or all the outstanding shares of stock of a bank/quasi bank, as a means to develop strong and larger financial institutions,” the banks or “constituents/participating entities” may ask the BSP for incentives or regulatory “reliefs”.

The most prominent consolidation program right now is the BSP and the Philippine Deposit Insurance Corp.’s P5-billion “Strengthening Program for Rural Banks”. This program highlights the additional incentives such as financial assistance and regulatory relief to encourage more consolidations among the bigger banks and the smaller thrift and rural banks.

“Financial assistance may be granted by PDIC to augment capital shortfalls and attract new investors,” the BSP said. Also to be offered is an expanded regulatory relief and branching incentives package for participating banks or the “white knights”.

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