Rural banks are getting stronger in Manila
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