Ru­ral banks are get­ting stronger in Manila

The Pak Banker - - Company& -

MANILA: The Ru­ral Bankers As­so­ci­a­tion of the Philip­pines (RBAP) has frowned on the Philip­pine De­posit In­surance Corp.'s (PDIC) claim that the coun­try's ru­ral bank­ing in­dus­try is grow­ing weaker. RBAP ex­ec­u­tive di­rec­tor Vi­cente Men­doza said in a state­ment this week­end that the in­dus­try is be­com­ing stronger de­spite the clo­sure of 23 ru­ral banks as of endOc­to­ber. Men­doza pointed out that only 10 out of the 23 ru­ral banks placed by PDIC un­der re­ceiver­ship were mem­bers of RBAP. RBAP has 599 mem­bers na­tion­wide. The PDIC's claim does not, in any­way, en­cour­age in­vestors to come in and buy banks un­der re­ceiver­ship, Men­doza said.

The Bangko Sen­tral ng Pilip­inas (BSP) and the PDIC had launched the "Strength­en­ing Pro­gram for Ru­ral Banks" or SPRB to strengthen the coun­try's ru­ral bank­ing in­dus­try through merg­ers and ac­qui­si­tion. The pro­gram in­volves a P5-bil­lion fi­nan­cial as­sis­tance and a grant of reg­u­la­tory re­lief from the BSP and PDIC over two years. Ru­ral banks qual­i­fied to avail of the pro­gram have risk-based cap­i­tal ad­e­quacy ra­tio be­low the BSP-man­dated 10 per­cent and those that in­tend to merge or con­sol­i­date with el­i­gi­ble, strate­gic third-party in­vestors. Men­doza pointed out that ru­ral banks pre­fer to open new branches rather than ac­quire banks un­der re­ceiver­ship due to the tighter cap­i­tal­iza­tion rules un­der the Basel com­mit­ment the BSP is im­ple­ment­ing. Basel ac­cords crafted in Basel, Switzer­land is an int’l reg­u­la­tory frame­work of banks. Last month, the BSP in­creased the min­i­mum cap­i­tal re­quire­ment for ru­ral banks by as much as 285pc to help sus­tain vi­a­bil­ity and com­pet­i­tive­ness of ma­jor in­dus­try play­ers. -PB News

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